Under what circumstances is Chatime responsible for collecting taxes from the franchisee?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
Guarantor, or their Interested Parties breaches clause 9.2 or 9.3, Franchisee must account for and pay to Franchisor all compensation, profits, monies, accruals, increments, or other benefits derived or received as a result of any such breach.
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;
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, Chatime itself is not responsible for the franchisee's taxes. Instead, the franchisee is responsible for their own taxes, liabilities, and costs associated with the franchised business.
Specifically, the franchisee is required to indemnify Chatime against any losses, liabilities, legal costs, and expenses incurred by Chatime as a result of the franchisee's taxes, liabilities, or costs of the franchised business. This means that if Chatime incurs any expenses or losses due to the franchisee's tax obligations, the franchisee must reimburse Chatime for those amounts.
This arrangement is typical in franchising, where franchisees are generally treated as independent business owners responsible for their own financial obligations, including taxes. The indemnity clause protects Chatime from financial liabilities arising from the franchisee's business operations and ensures that the franchisee bears the responsibility for complying with all applicable tax laws and regulations.