What is included in the definition of 'Legal Costs' that Chatime may incur?

According to Chatime's 2025 Franchise Disclosure Document, 'Legal Costs' encompass a comprehensive range of expenses related to legal representation and proceedings. Specifically, these costs include all fees, costs, and disbursements that Chatime or its affiliates actually pay or are obligated to pay to their own legal representatives. This applies whether or not these fees are assessed under a formal retainer or cost agreement between Chatime and its legal counsel.

Furthermore, the definition extends to cover other expenses incurred by Chatime or its affiliates in connection with any demand, action, arbitration, or other legal proceeding. This broad category includes various forms of dispute resolution, such as mediation, compromise, out-of-court settlements, and appeals. The inclusion of 'other expenses' suggests that Legal Costs are not limited to attorney fees but can also include expenses like court filing fees, expert witness fees, travel costs for legal personnel, and other related expenditures.

For a prospective Chatime franchisee, this definition is important because it clarifies the scope of legal expenses for which they may be responsible under the franchise agreement, particularly in indemnity clauses. Franchisees should be aware that they may be required to cover not only Chatime's direct legal fees but also a wide array of associated costs in the event of a dispute or legal action arising from the franchisee's operations or breach of the agreement. Understanding this definition is crucial for assessing the potential financial risks associated with the franchise.