Is Chatime or its Affiliates allowed to receive payments from Approved Suppliers based on their dealings with franchisees?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (7) Franchisor or its Affiliates may receive payments from Approved Suppliers on account of such suppliers' dealings with Franchisee and may use all amounts so received without restriction and for any purpose Franchisor or its Affiliates deem appropriate (unless Franchisor or its Affiliates agree otherwise with the supplier).
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime or its affiliates are permitted to receive payments from approved suppliers based on the suppliers' transactions with franchisees. Specifically, Chatime can use these payments without any restrictions and for any purpose they deem appropriate, unless they have a separate agreement with the supplier that states otherwise.
This arrangement is common in franchising, where franchisors negotiate deals with suppliers and receive rebates or commissions based on the volume of purchases made by their franchisees. For a prospective Chatime franchisee, this means that while they are required to purchase raw materials and other products from approved suppliers, Chatime benefits financially from these arrangements.
While this practice is generally accepted, it's important for franchisees to ensure that the prices they pay to approved suppliers are competitive and reasonable. Franchisees should also be aware that Chatime has the right to change approved suppliers, which could potentially impact the cost and availability of supplies. It is within Chatime's discretion to use the payments received from the approved vendor as they see fit.