Where in the Chatime FDD can I find information about guarantee and indemnity related to Chatime?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
10 Indemnity and Limitation of Liability
10.1 Indemnity
- (1) Franchisee Parties indemnify Franchisor and each of its Affiliates (Chatime Group) against all:
- (a) Losses incurred by the Chatime Group;
- (b) Liabilities incurred by the Chatime Group; and
- (c) All Legal Costs and other Costs and expenses incurred by the Chatime Group in connection with a demand, action, arbitration, or other proceeding (including mediation, compromise, out of court settlement or appeal),
arising directly or indirectly as a result of or in connection with:
- (d) A breach by Franchisee Parties of this Agreement or any Collateral Agreement;
- (e) Any injury to, or loss of property of, any person in or on premises from which the business is conducted;
- (f) Franchisee's taxes, liabilities or Costs of The Franchised Business;
- (g) Any negligent or willful act or omission of Franchisee, its employees, agents, servants, or contractors; and
- (h) Any warranty, promise, or representation made by Franchisee Parties or any employee, agent, or other person acting on behalf of Franchisee Parties being incomplete, inaccurate, or misleading.
- (2) Franchisor's rights at law and under this Agreement, including its right to be indemnified under this clause, are not affected by:
- (a) Franchisor ending the Franchise or the termination of any Collateral Agreement;
- (b) Franchisor accepting Franchisee's repudiation of this Agreement or any related Agreement; or
- (c) Anything else.
10.2 Limitation of Liability
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime FDD, information regarding indemnity can be found in Section 10, titled "Indemnity and Limitation of Liability." Specifically, clause 10.1 outlines the indemnity provided by the Franchisee Parties to Chatime Group, detailing protection against losses, liabilities, legal costs, and expenses arising from breaches of the agreement, injuries or property loss on the premises, franchisee's taxes or costs, negligence, and inaccurate representations. Clause 10.2 further addresses the limitation of liability for Chatime.
Additionally, the FDD specifies that a Guarantor may be involved, who agrees to provide a guarantee and indemnity to Chatime for the franchisee's performance of obligations under the Franchise Agreement. This arrangement is made in consideration of Chatime granting the franchise to the franchisee. The presence of a guarantor adds another layer of financial security for Chatime, ensuring that there is a party responsible for fulfilling the franchisee's obligations if they fail to do so.
For prospective franchisees, understanding these indemnity and guarantee clauses is crucial. The indemnity clause means that franchisees may be responsible for covering Chatime's losses and legal costs in various situations, including breaches of contract or negligence. The guarantee from a Guarantor ensures that Chatime has recourse to another party if the franchisee defaults on their obligations. Franchisees should carefully review these sections with legal counsel to fully understand their potential liabilities and obligations under the franchise agreement.