Under what circumstances are Chatime franchisees required to indemnify the Chatime Group?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
10 Indemnity and Limitation of Liability
10.1 Indemnity
- (1) Franchisee Parties indemnify Franchisor and each of its Affiliates (Chatime Group) against all:
- (a) Losses incurred by the Chatime Group;
- (b) Liabilities incurred by the Chatime Group; and
- (c) All Legal Costs and other Costs and expenses incurred by the Chatime Group in connection with a demand, action, arbitration, or other proceeding (including mediation, compromise, out of court settlement or appeal),
arising directly or indirectly as a result of or in connection with:
- (d) A breach by Franchisee Parties of this Agreement or any Collateral Agreement;
- (e) Any injury to, or loss of property of, any person in or on premises from which the business is conducted;
- (f) Franchisee's taxes, liabilities or Costs of The Franchised Business;
- (g) Any negligent or willful act or omission of Franchisee, its employees, agents, servants, or contractors; and
- (h) Any warranty, promise, or representation made by Franchisee Parties or any employee, agent, or other person acting on behalf of Franchisee Parties being incomplete, inaccurate, or misleading.
- (2) Franchisor's rights at law and under this Agreement, including its right to be indemnified under this clause, are not affected by:
- (a) Franchisor ending the Franchise or the termination of any Collateral Agreement;
- (b) Franchisor accepting Franchisee's repudiation of this Agreement or any related Agreement; or
- (c) Anything else.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, franchisees must indemnify the Chatime Group (which includes Chatime and its affiliates) against losses, liabilities, legal costs, and other expenses under certain circumstances. This indemnification requirement is triggered by specific events that could lead to financial or legal repercussions for the Chatime Group.
The franchisee is obligated to indemnify the Chatime Group if the franchisee breaches the Franchise Agreement or any related agreements. Additionally, indemnification is required if any person experiences injury or property loss on the premises of the franchised business. Franchisee's taxes, liabilities, or costs associated with the franchised business also trigger the indemnification clause.
Furthermore, the franchisee must indemnify the Chatime Group for any negligent or willful act or omission by the franchisee, its employees, agents, servants, or contractors. Finally, the franchisee is responsible for indemnification if any warranty, promise, or representation made by the franchisee parties or anyone acting on their behalf is incomplete, inaccurate, or misleading. Chatime's right to be indemnified remains even if the Franchise Agreement is terminated or if Chatime accepts the franchisee's rejection of the agreement.