In the Chatime franchise agreement, can 'Control' be established through a contract?

According to the 2025 Chatime Franchise Disclosure Document, the definition of 'Control, Controlled by, or under Common Control or Controlling Interest' includes the possibility of establishing control through a contract. Specifically, it states that control can be exerted either through owning more than 50% of the voting interest or 'by contract, or otherwise.'

This definition is important for prospective Chatime franchisees because it clarifies how 'control' is determined within the franchise agreement. It means that Chatime can exert control over a franchisee not only through direct ownership but also through the contractual terms outlined in the franchise agreement. This could include stipulations related to operational standards, marketing strategies, or financial management.

For a potential Chatime franchisee, this highlights the importance of carefully reviewing the franchise agreement to understand all the ways in which Chatime can influence or direct the management and policies of the franchise. Franchisees should pay close attention to clauses that grant Chatime specific decision-making authority or impose obligations that effectively limit the franchisee's autonomy. Understanding these control mechanisms is crucial for assessing the level of independence a franchisee will have in operating their Chatime business.