Can Chatime or its affiliates receive payments from approved suppliers based on their dealings with franchisees?

According to Chatime's 2025 Franchise Disclosure Document, Chatime or its affiliates may indeed receive payments from approved suppliers based on the suppliers' dealings with franchisees. Specifically, Chatime has the right to collect these payments without any obligation to share them with the franchisee.

This arrangement means that while franchisees are required to purchase raw materials and other products from approved suppliers, Chatime can independently negotiate and receive financial benefits from these suppliers based on the volume or value of purchases made by the franchisees. The FDD states that Chatime can use these received amounts without restriction and for any purpose they deem appropriate, unless they agree otherwise with the supplier.

For a prospective Chatime franchisee, this highlights the importance of understanding the full cost structure of supplies and the potential impact of these arrangements on their profitability. While franchisees are obligated to use approved suppliers, they do not directly benefit from any incentives or payments Chatime receives from these suppliers. This is a fairly common practice in franchising, where franchisors often negotiate rebates or other benefits with suppliers due to the collective buying power of the franchise network.