What is the name of the New York law that Chatime USA LLC allegedly violated?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
em 3: Litigation**
Investigation by Letitia James, Attorney General of the State of New York, of La Kaffa International Co., Ltd., Chatime USA, LLC, and Yao-Hui Wang. In December 2018, the Attorney General of the State of New York (the "NYOAG") began to inquire into the activities of our affiliate Chatime USA LLC and La Kaffa pursuant to New York General Business Law, Article 33, §680 et seq., also known as the New York State Franchise Sales Act (the "NY Franchise Sales Act"). The inquiries were made in connection with the issues of whether our affiliate Chatime USA LLC and La Kaffa sold franchises from or in New York without satisfying the pre-requisite of registering the franchise offerings with the NYOAG or otherwise having a franchise registration
exemption. The NYOAG found that our affiliate Chatime USA LLC and La Kaffa sold franchises from or in New York without being registered or exempt from registration. On November 25, 2019, our affiliate Chatime USA LLC, La Kaffa, and Yao-Hui Wang entered into an Assurance of Discontinuance with the NYOAG (the "Assurance of Discontinuance") prohibiting our affiliate Chatime USA LLC and La Kaffa from engaging in, or attempting to engage in, conduct in violation of the NY Franchise Sales Act. Further, pursuant to the Assurance of Discontinuance, (i) our affiliate Chatime USA LLC and La Kaffa were required to offer rescission to franchisees that were sold franchises in violation of the NY Franchise Sales Act, and (ii) our affiliate Chatime USA LLC and La Kaffa were required to pay $25,000 in penalties and
Source: Item 3 — Litigation (FDD pages 10–11)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime USA LLC was investigated by the Attorney General of the State of New York for potentially violating New York General Business Law, Article 33, §680 et seq., also known as the New York State Franchise Sales Act. The investigation was initiated in December 2018 and focused on whether Chatime USA LLC and La Kaffa International Co., Ltd. sold franchises in or from New York without properly registering the franchise offerings with the NYOAG or qualifying for an exemption.
The NYOAG concluded that Chatime USA LLC and La Kaffa had indeed sold franchises without the required registration or exemption. As a result, on November 25, 2019, Chatime USA LLC, La Kaffa, and Yao-Hui Wang entered into an Assurance of Discontinuance with the NYOAG. This agreement prohibited Chatime USA LLC and La Kaffa from further conduct violating the NY Franchise Sales Act.
Under the terms of the Assurance of Discontinuance, Chatime USA LLC and La Kaffa were obligated to offer rescission to franchisees who had been sold franchises in violation of the NY Franchise Sales Act. Additionally, they were required to pay $25,000 in penalties and costs to the State of New York. This indicates the seriousness of franchise law compliance and the potential financial repercussions for non-compliance.