What warranty does a Chatime franchisee make regarding their entity's constitution?
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:
- (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)
According to Chatime's 2025 Franchise Disclosure Document, the franchisee provides an indemnity to Chatime, meaning the franchisee agrees to protect Chatime from certain losses, liabilities, and costs. Specifically, the franchisee indemnifies Chatime against losses, liabilities, and all legal costs arising from any warranty, promise, or representation made by the franchisee or their representatives that is incomplete, inaccurate, or misleading. This includes warranties related to the franchisee's business operations.
This means that if a franchisee, or someone acting on their behalf, makes a statement about the franchise that turns out to be false or misleading, and this causes Chatime to suffer a loss or incur costs, the franchisee is responsible for covering those losses and costs. This could include legal fees, damages, or other expenses. The indemnity extends to any employee, agent, or other person acting on behalf of the franchisee.
For a prospective Chatime franchisee, this highlights the importance of ensuring that all statements and representations made about the franchise are accurate and complete. It also underscores the need to carefully review all marketing materials and communications to avoid making any misleading claims. Franchisees should ensure their employees and agents are properly trained and informed to prevent inaccurate or incomplete representations.
This type of indemnity clause is relatively common in franchise agreements, as it protects the franchisor from potential liabilities arising from the actions of its franchisees. However, the scope of the indemnity can vary, so it is important for franchisees to understand the specific terms of the agreement and seek legal advice if necessary.