Under what circumstances would Chatime Global LLC, as the Member, be liable for the debts, obligations, or other liabilities of Chatime Franchise LLC?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
Chatime Franchise LLC (the "Company") was formed on July 12, 2022, as a wholly-owned subsidiary of Chatime Global LLC (the "Member"), as a Delaware limited liability company to sell franchises pursuant to a license agreement dated September 23, 2022, between the Company's sole member, Chatime Global LLC, and its subsidiaries ("Licensee Parties") and La Kaffa International Co., Ltd. (the "Licensor"). The Licensor has 100% ownership interest in Chatime Northstar which has 50% ownership interest of the Member. Pursuant to the Company's standard franchise agreement, franchisees will operate a Chatime food service offering gourmet coffees and teas, other coffee and tea-based beverages, bubble tea, compatible food products, coffee and tea makers, and related supplies, accessories, and gifts at a specified location within a designated geographic territory.
The Company is a limited liability company and, therefore, the Member is not liable for the debts, obligations or other liabilities of the Company, whether arising in contract, tort or otherwise, unless the Member has signed a specific guarantee.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime Franchise LLC is structured as a limited liability company (LLC) and is a wholly-owned subsidiary of Chatime Global LLC, referred to as the 'Member.' Generally, in a limited liability structure, the parent company (Chatime Global LLC) is not liable for the debts, obligations, or other liabilities of its subsidiary (Chatime Franchise LLC). This separation is designed to protect the parent company's assets from the subsidiary's business risks.
However, the FDD specifies an exception to this general rule. Chatime Global LLC, as the Member, would be liable for the debts, obligations, or other liabilities of Chatime Franchise LLC if Chatime Global LLC has signed a specific guarantee. This means that if Chatime Global LLC has explicitly agreed to cover the debts or obligations of Chatime Franchise LLC in a written agreement, it would then be responsible for those liabilities.
This is a critical point for prospective Chatime franchisees to understand. While the LLC structure generally shields the parent company, a specific guarantee overrides this protection. Franchisees should be aware that such a guarantee would need to be in place to hold Chatime Global LLC accountable for Chatime Franchise LLC's debts. It is standard practice in franchising for the franchise entity to be a separate legal entity to limit liability, but specific guarantees can alter this arrangement.