What is included in the 'Franchisor's Costs' that a Chatime developer might be required to pay or reimburse?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
23.8 Costs and Expenses
- (1) Developer must pay, or reimburse Franchisor on demand for, all Franchisor's Costs (including legal Costs on a solicitor and own client or full indemnity basis, whichever is the greater) in connection with or incidental to:
- (a) Any default by Developer in observing or performing any of its obligations under this Agreement;
- (b) Any termination of this Agreement; and
- (c) The contemplated, attempted,
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a developer may be required to pay or reimburse Chatime for 'Franchisor's Costs' under certain circumstances. These costs include legal costs, calculated on a solicitor and own client or full indemnity basis, whichever is greater.
The specific situations where these costs may be incurred relate to any default by the developer in fulfilling their obligations under the development agreement, any termination of the agreement, or the contemplation or attempted assignment of the agreement. This means that if a Chatime developer fails to meet the terms of their agreement, seeks to end the agreement, or tries to transfer their rights without proper authorization, they could be responsible for covering Chatime's associated legal and other costs.
This provision is fairly standard in franchising, as it aims to protect the franchisor from expenses arising from a franchisee's non-compliance or actions that could negatively impact the franchise system. The fact that legal costs are calculated on a 'solicitor and own client' or 'full indemnity basis' is significant, as it means the developer could be responsible for a broad range of legal expenses incurred by Chatime, potentially exceeding standard cost recovery.