What warrants does a Chatime franchisee make regarding its ability to lawfully conduct business?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
Based on the 2025 Chatime Franchise Disclosure Document, a franchisee provides an indemnity to Chatime and its affiliates, referred to as the Chatime Group. This means the franchisee is responsible for protecting the Chatime Group against various losses, liabilities, and costs.
Specifically, the franchisee agrees to cover losses and legal costs incurred by the Chatime Group due to any breach of the Franchise Agreement or related agreements. This also extends to any injury or property loss occurring on the premises of the Chatime business. The franchisee is also liable for their own taxes, liabilities, and costs associated with operating the franchised business. Furthermore, the indemnity covers any negligent or willful actions or omissions by the franchisee, their employees, agents, or contractors.
Additionally, the franchisee is responsible for any incomplete, inaccurate, or misleading warranties, promises, or representations made by the franchisee or anyone acting on their behalf. This broad indemnity ensures that Chatime is protected from a wide range of potential liabilities arising from the franchisee's operation of the business. This type of clause is standard in franchise agreements, shifting much of the operational risk and liability to the franchisee.