Does the Chatime definition of 'Control' include control exerted through contractual agreements?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
The following words have these meanings in this Agreement unless the contrary intention appears:
- (1) Affiliate means any Person that directly or indirectly Controls, that is directly or indirectly Controlled by, or that is under Common Control or Controlling Interest with, a specified Person.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
Based on the 2025 Chatime Franchise Disclosure Document, the term 'Affiliate' is defined in relation to 'Control'. Specifically, an 'Affiliate' is any entity that directly or indirectly Controls, is Controlled by, or is under Common Control with a specified Person. The definition of 'Control' itself, however, is not provided within the excerpts of the FDD. Therefore, it is not possible to determine whether 'Control' includes control exerted through contractual agreements.
Because the definition of 'Control' is absent, prospective Chatime franchisees should seek clarification from the franchisor regarding the scope and meaning of 'Control'. Understanding this definition is crucial, as it determines the extent of affiliation and potential liabilities or benefits associated with affiliated entities.
It is common in franchising for the definition of 'control' to have significant implications regarding liability, compliance, and the overall structure of the franchise network. Therefore, prospective franchisees should ensure they fully understand how Chatime defines and interprets 'Control' before entering into a franchise agreement.