Are relatives of a person with an interest in the Chatime Developer considered 'Interested Parties'?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
The agreement by Developer Parties in clause 7.2 applies to any of them, the Interested Parties, and those acting:
- (1) In partnership or association with another person;
- (2) As principal, agent, representative, director, officer, employee, or financier;
- (3) As member, shareholder, debenture holder, note holder, or holder of any other security;
- (4) As trustee of or as a consultant or adviser to any person; or
- (5) In any other capacity.
Developer must procure that any Interested Party specified by Franchisor enters into a noncompete and confidentiality agreement with Franchisor that contains:
- (1) Similar reasonable restraints as imposed on Developer and Guarantor pursuant to clause 7.2; and
- (2) Similar confidentiality obligations to the obligations imposed pursuant to clause 6, as and when required by Franchisor.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
Based on the 2025 Chatime Franchise Disclosure Document, the term 'Interested Parties' is used in the context of restrictions and agreements related to the Developer. The FDD does not explicitly define 'Interested Parties' to include relatives of a person with interest in the Chatime Developer. However, the document indicates that 'Interested Parties' are subject to certain restraints and may be required to enter into confidentiality and non-competition agreements.
Specifically, clause 7.3 states that the agreement by Developer Parties applies to them, the Interested Parties, and those acting in various capacities such as partners, agents, directors, or shareholders. Clause 7.6 further states that the Developer must ensure that any Interested Party specified by Chatime enters into a non-compete and confidentiality agreement with Chatime. These agreements contain similar restraints and confidentiality obligations as those imposed on the Developer and Guarantor.
Given the lack of a clear definition regarding relatives, it is important for a prospective Chatime Developer to seek clarification from the franchisor on who specifically qualifies as an 'Interested Party'. Understanding the scope of this term is crucial, as it determines who will be subject to non-compete and confidentiality agreements, potentially impacting family members or close associates involved in other business ventures. This due diligence will help avoid potential conflicts and ensure full compliance with Chatime's franchise agreement.
In summary, while the FDD does not directly address whether relatives are considered 'Interested Parties,' the broad language regarding who may be included suggests that Chatime has the discretion to require certain individuals connected to the Developer to sign non-compete and confidentiality agreements. A prospective franchisee should clarify this point with Chatime to fully understand the implications.