Can Chatime act as an approved supplier for franchisees?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
5.8 Products and Supply Arrangements
- (1) Franchisee must establish and maintain supply arrangements on competitive terms and conditions for Products, the shop-fitting and signage of the Outlet and equipment to be sold by or used in the operation of the Outlet. Such suppliers will be subject to Franchisor's prior written approval and, upon approval, will be deemed to be Approved Suppliers. Franchisor may, at any time and in its discretion, revoke its approval of any Approved Supplier. Franchisor may itself be an Approved Supplier.
- (2) If Franchisee requests approval of a new alternate supplier, Franchisee shall provide Franchisor with samples of the proposed alternate supplier's product, all information and back-up documentation requested by Franchisor concerning the proposed alternate supplier and its products, and access to inspect the proposed alternate supplier's production facilities, and Franchisee shall pay Franchisor for all of its costs and expenses in evaluating and deciding upon the request, including without limitation out of pocket expenses, compensation for the time spent evaluating the request, and overhead expenses.
- (3) Approval of a supplier by Franchisor may be conditional on the supplier meeting Franchisor's quality and standards requirements. Franchisor may require any supplier applying for approval to allow Franchisor to inspect the proposed supplier's facilities to assist Franchisor in determining if the proposed supplier meets Franchisor's criteria.
- (4) Franchisee acknowledges that Franchisor may from time to time vary the range of Products.
- (5) Unless otherwise provided in writing by Franchisor, Franchisee must purchase all Raw Materials sold in the Outlet from Franchisor on the then-current Terms of Trade. Otherwise, Franchisee must purchase all Raw Materials from suppliers approved by Franchisor in writing
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime may be an approved supplier for franchisees. Franchisees are required to establish and maintain supply arrangements for products, shop-fitting, signage, and equipment. These suppliers are subject to Chatime's prior written approval and, once approved, are considered "Approved Suppliers." However, Chatime retains the right to revoke approval of any supplier at any time.
If a franchisee wants to use a new supplier, they must provide Chatime with product samples, all requested information and documentation about the proposed supplier and its products, and access to the supplier's production facilities for inspection. The franchisee is responsible for covering all of Chatime's costs and expenses associated with evaluating the new supplier, including out-of-pocket expenses, compensation for time spent on the evaluation, and overhead expenses.
Unless Chatime provides otherwise in writing, franchisees must purchase all raw materials sold in their outlets directly from Chatime based on the current Terms of Trade. If not purchasing from Chatime, franchisees must acquire all raw materials from suppliers that Chatime has approved in writing. This ensures that Chatime maintains control over the quality and consistency of its products, as franchisees are obligated to acquire products needed to prepare Chatime menu items only from approved suppliers.