Does the 'Legal Costs' definition for Chatime include costs paid to affiliates' legal representatives?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (39) Legal Costs means all fees, costs and disbursements actually paid or payable by Franchisor or its Affiliates to its own legal representatives (whether or not assessed under a retainer or costs agreement in place between Franchisor and its legal representatives) and other expenses incurred by Franchisor or its Affiliates in connection with a demand, action, arbitration, or other proceeding (including mediation, compromise, out of court settlement, or appeal).
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the definition of 'Legal Costs' includes fees, costs, and disbursements paid by Chatime or its affiliates to their own legal representatives. This encompasses all expenses, regardless of whether they are assessed under a retainer or costs agreement. These costs can arise from demands, actions, arbitrations, or other proceedings, including mediation, compromise, out-of-court settlements, or appeals.
This definition is important for prospective franchisees because it clarifies the scope of legal expenses that Chatime may incur and for which a franchisee might be responsible under the indemnity provisions of the franchise agreement. The franchisee could be liable for these legal costs if they arise due to a breach of the agreement, negligence, or other actions specified in the indemnity clause.
The inclusion of costs paid to legal representatives of Chatime's affiliates broadens the potential financial responsibility of the franchisee. It means that if a legal issue involves an affiliate of Chatime, the franchisee could be responsible for covering the legal costs incurred by that affiliate as well. Franchisees should carefully review the indemnity clauses in conjunction with this definition to understand the full extent of their potential liability for legal costs incurred by Chatime and its affiliates.
Prospective Chatime franchisees should seek legal counsel to fully understand the implications of this definition and the related indemnity clauses. It is crucial to assess the potential risks and liabilities associated with these provisions before entering into a franchise agreement with Chatime.