Does Chatime require the Developer to acknowledge that they have undertaken their own due diligence before signing the agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the requirements of the Illinois Franchise Disclosure Act of 1987, the parties to the Chatime Franchise, LLC Multi-Unit Development Agreement (the "Multi-Unit Development Agreement") agree as follows:
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- Illinois law governs the Multi-Unit Development Agreement.
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- In conformance with §4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction or venue in a forum outside the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
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- Your rights upon Termination and Non-Renewal are set forth in §§19 and 20 of the Illinois Franchise Disclosure Act.
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- In conformance with §41 of the Illinois Franchise Disclosure Act, any condition, stipulation, or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
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- No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
Based on the 2025 Chatime Franchise Disclosure Document excerpts, there is no explicit requirement for a developer to acknowledge they have undertaken their own due diligence before signing the agreement, except in Illinois. The Illinois Amendment to the Chatime Franchise, LLC Multi-Unit Development Agreement includes a clause stating that "No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor." This suggests that while Chatime may present documents for signature at the commencement of the franchise relationship, these documents cannot waive claims related to franchise law or disclaim reliance on statements made by the franchisor.
This Illinois amendment aims to protect franchisees by ensuring they retain their rights under the Illinois Franchise Disclosure Act, preventing them from inadvertently waiving those rights through acknowledgements or statements made during the initial franchising process. This protection extends to claims of fraud and reliance on franchisor statements.
For prospective Chatime developers, especially those in Illinois, it is crucial to understand the implications of this amendment. While an acknowledgement of due diligence might be part of the standard documentation, the Illinois amendment ensures that such acknowledgements do not undermine the franchisee's legal rights or ability to pursue claims against the franchisor if necessary. Developers outside of Illinois should seek clarification from Chatime regarding any similar acknowledgements and their potential impact on their rights.
It would be prudent for a prospective Chatime franchisee to seek legal counsel to fully understand their rights and obligations, especially concerning any documents they are asked to sign at the commencement of the franchise relationship. This is particularly important in states like Illinois with specific franchise laws designed to protect franchisees.