Does the Chatime definition of 'Interested Party' include officers of any entity directly controlling the Chatime franchisee?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
estrained Business; and
- (d) procure, employ, seek to employ or engage, or appoint in any capacity (whether as a consultant, director or otherwise), any person who is or has been in the 12 months
prior to such action an employee, independent contractor, or prospective franchisee of the Franchisor, its affiliates, or any Chatime Store Business.
(e) These restraints shall not apply to the Developer's or its affiliates' continued operation of individual Chatime Stores being operated under valid Franchise Agreement, which have not been terminated and are not in default.
7.3 Restraint Applies to Conduct in Any Capacity
The agreement by Developer Parties in clause 7.2 applies to any of them, the Interested Parties, and those acting:
- (1) In partnership or association with another person;
- (2) As principal, agent, representative, director, officer, employee, or financier;
- (3) As member, shareholder, debenture holder, note holder, or holder of any other security;
- (4) As trustee of or as a consultant or adviser to any person; or
- (5) In any other capacity.
7.4 Separate Restraint Agreements
Clauses 7.2 and 7.3 have effect as comprising each of the separate provisions which results from each combination of a capacity referred to in clause 7.3, a category of conduct referred to in clause 7.2, a geographical area specified in Schedule 1 and a period of time specified in Schedule 1.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
Based on the 2025 Chatime Franchise Disclosure Document, the term 'Interested Parties' is relevant in the context of restraints on conduct and confidentiality agreements, particularly for developers. Clause 7.3 states that the agreement by Developer Parties in clause 7.2 applies to any of them, the Interested Parties, and those acting as principal, agent, representative, director, or officer. This suggests that the actions of directors and officers are included in the definition of 'Interested Parties'.
Specifically, Chatime requires the developer to ensure that any of its directors who are not a party to the agreement, any Interested Party, manager, and any of its key employees nominated by Chatime enter into a confidentiality and non-competition agreement. This agreement must be in place before they receive or are granted access to any of the Confidential Information. This requirement extends the obligations beyond just the franchisee to key individuals associated with the developer.
Furthermore, Chatime mandates that the developer must ensure that any Interested Party specified by Chatime enters into a non-compete and confidentiality agreement with Chatime. This agreement should contain similar reasonable restraints as imposed on the developer and guarantor, along with similar confidentiality obligations. This provision allows Chatime to extend these obligations to other parties they deem relevant, ensuring broader protection of their confidential information and competitive interests.