To what extent is Chatime Franchisor liable regarding approvals of premises provided to the Developer?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
To the extent permitted by law, Franchisor will have no liability in relation to:
(1) Any approval of premises or a site for an Outlet provided by Franchisor to Developer pursuant to the terms of this Agreement;
- (2) Any other approvals provided by Franchisor to Developer in connection with Developer's Operation pursuant to the terms of this Agreement;
- (3) The conduct of Developer's Operation by Developer, the success or failure of which largely depends upon the business abilities and efforts of Developer; and
- (4) The location, design, construction, or renovation of any Outlet or the furnishings, fixtures and equipment to be required, notwithstanding the right of Franchisor to approve any plans, and to inspect the construction and/or renovation work and such Outlet. Such rights of Franchisor are exercised solely for the purpose of ensuring compliance with the terms and conditions of this Agreement.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime has limited liability regarding premises approvals provided to the Developer. Specifically, Chatime will not be liable in relation to any approval of premises or a site for an Outlet provided to the Developer, to the extent permitted by law. This indicates that while Chatime may offer approvals, the ultimate responsibility for the suitability and success of the location rests with the Developer.
This limitation of liability extends to other approvals Chatime provides in connection with the Developer's operation. It also includes the location, design, construction, or renovation of any Outlet, even though Chatime retains the right to approve plans and inspect the work. Chatime's exercise of these rights is solely to ensure compliance with the franchise agreement terms and conditions, not to guarantee the success or suitability of the location.
The FDD emphasizes that the success or failure of the Developer's operation largely depends on the Developer's business abilities and efforts. Prospective Chatime developers should, therefore, conduct thorough due diligence on potential sites and not rely solely on Chatime's approval. This includes assessing market conditions, local competition, and the overall suitability of the location for a Chatime store. Developers should also seek independent professional advice on site selection, design, and construction to mitigate risks.