In the Chatime franchise agreement, can 'Control' be established through ownership of voting interest?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (15) Control, Controlled by, or under Common Control or Controlling Interest means direct or indirect possession of the power to direct or cause the direction of the management or policies of any other Person, whether through more than 50% of the ownership of voting interest, by contract, or otherwise.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, 'Control' can be established through the ownership of voting interest. The FDD defines 'Control, Controlled by, or under Common Control or Controlling Interest' as the power to direct the management or policies of another person. This power can be obtained through owning more than 50% of the voting interest.
For a prospective Chatime franchisee, this definition is important because it clarifies how control over the franchise can be exerted. If a franchisee owns more than 50% of the voting interest in their Chatime business, they are considered to have control. This could affect decision-making processes and the overall management of the franchise.
It is important to note that control can also be established 'by contract, or otherwise,' meaning that ownership of voting interest is not the only way to exert control. A franchisee should carefully review the franchise agreement to understand all the ways in which control can be established and the implications for their business.