Does the Chatime franchisee acknowledge that they are not entering the agreement based on financial information provided by Chatime?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- §31125 of the California Corporation Code requires us to give you a disclosure document, in a form and containing such information as the Commissioner may by rule or order require, prior to a solicitation of a proposed material modification of an existing franchise.
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- The Franchise Agreement requires that any action that is brought by you against us be commenced in New York and that you must irrevocably submit to the jurisdiction of such court. This provision may not be enforceable under California law.
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- Exhibit F to the Franchise Disclosure Document (Acknowledgement Addendum to Franchise Agreement) is deleted. Franchisee and its principals are not required to complete and sign the Acknowledgement Addendum.
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- No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
The 2025 Chatime Franchise Disclosure Document includes an addendum specific to California that addresses this issue. Specifically, it states that franchisees are not required to sign an acknowledgement addendum and that no statement signed by a franchisee can disclaim reliance on statements made by Chatime. This means that Chatime franchisees in California retain their rights to make claims under franchise law, including claims of fraud, and that they cannot waive their right to rely on statements made by Chatime during the franchise sales process. This addendum supersedes any other conflicting terms in any document related to the franchise agreement. This protection is specific to California.
This type of clause is included to protect franchisees from unknowingly waiving their rights, especially regarding reliance on information provided by the franchisor. Many states have franchise laws in place to protect franchisees, and these laws often address the issue of reliance on franchisor statements. The inclusion of this addendum ensures that Chatime complies with California franchise law and that franchisees in California are aware of their rights.
Prospective franchisees outside of California should carefully review their franchise agreements and any related documents to understand whether they are waiving any rights to make claims based on statements made by Chatime. They should also consult with an attorney to understand the franchise laws in their state and how those laws may protect them. It is important to note that franchise laws vary from state to state, and what is permissible in one state may not be permissible in another.