Does the Chatime franchisee acknowledge that the franchisor is granting the franchise based on the franchisee's character, skills, and financial capacity?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) Franchisee acknowledges that Franchisor has agreed to grant the Franchise to Franchisee in reliance on the character, skills, and financial capacity of Franchisee, the Owners and the General Manager, that the establishment and operation of the Franchised Business will involve significant financial risks, and that the success of the Franchised Business will depend upon the skills and financial capacity of Franchisee and the Owners and also upon changing economic and market conditions.
- (3) Franchisee acknowledges and agrees that it has conducted an independent investigation of the business contemplated by this Agreement and recognizes that it involves business risks making the success of the venture largely dependent on the business abilities of Franchisee. Franchisor expressly disclaims the making of, and Franchisee acknowledges that it has not received or relied upon, any express or implied warranty or guarantee regarding the potential volume, profits, or success of the business venture contemplated by this Agreement.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the franchisee acknowledges that Chatime is granting the franchise in reliance on the franchisee's character, skills, and financial capacity. The franchisee also acknowledges that operating the franchised business involves significant financial risks and that the success of the business depends on the skills and financial capacity of the franchisee, as well as changing economic and market conditions. This acknowledgement highlights the importance Chatime places on the franchisee's qualifications and the inherent risks associated with the business.
This acknowledgement serves to protect Chatime by confirming that the franchisee understands the basis upon which the franchise was granted and the factors that will influence the business's success. It also emphasizes that Chatime is not responsible if the franchisee's lack of skills or financial resources contributes to the failure of the business. This is a common practice in franchising, as franchisors want to ensure that franchisees are aware of their responsibilities and the risks involved.
Furthermore, the franchisee also acknowledges conducting an independent investigation of the business and recognizes that its success is largely dependent on their own business abilities. Chatime expressly disclaims any warranty or guarantee regarding the potential volume, profits, or success of the business. This reinforces the understanding that the franchisee's performance is a critical factor in the success of the Chatime store and that Chatime does not guarantee any specific financial outcomes.