Can Chatime change its specifications, standards, and requirements for suppliers at any time?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
You or the supplier may request approval by submitting a written request to us. We may require that samples from the supplier be delivered to us or to a designated independent testing laboratory for testing prior to approval. All requests will be reviewed in accordance with our then-current procedures and subject to our available resources for review. You or the supplier will be required to reimburse us for all costs that we incur in the testing and approval process whether the supplier is approved or not. The supplier must meet our then-current specifications, standards, and requirements, which may include signing a non-disclosure agreement or a performance guarantee. We may change our specifications, standards, and requirements at any time and there is no limit on our right to do so. If the supplier that you propose is initially approved or disapproved, we will notify you and the supplier within 30 to 60 days depending on the nature of the products or services. We may withdraw our approval at any time if the supplier's performance does not meet our criteria, we change our specifications, standards or requirements, or for other reasons. If an approved supplier's approval is revoked, we will inform you of the revocation and you will cease to use that supplier.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 22–25)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime has the right to change its specifications, standards, and requirements for suppliers at any time, without any limitations. This means that Chatime can modify what it expects from its suppliers whenever it deems necessary.
For a prospective Chatime franchisee, this has several implications. First, if a franchisee proposes a supplier, that supplier must meet Chatime's current standards, which may include signing a non-disclosure agreement or providing a performance guarantee. The franchisee or supplier will bear all costs associated with the testing and approval process, regardless of whether the supplier is ultimately approved. Second, even if a supplier is initially approved, Chatime can withdraw its approval if the supplier's performance is unsatisfactory, if Chatime changes its standards, or for any other reason. If approval is revoked, the franchisee must immediately cease using that supplier.
This level of control allows Chatime to maintain consistency and quality across its franchise system. However, it also means that franchisees have limited autonomy in sourcing products and services and must adapt to changes implemented by Chatime. Franchisees should be prepared for potential disruptions in their supply chain and budget for the costs associated with supplier changes and approvals. It is also important to note that Chatime’s criteria for approving suppliers is not available to the franchisee or proposed suppliers.
Chatime may also limit the number of potential suppliers it considers for approval and may designate exclusive suppliers for certain product categories. This further restricts a franchisee's options and emphasizes the importance of understanding and accepting Chatime's control over the supply chain. Franchisees are required to purchase an adequate and balanced quantity of stock of approved products, with inventory requirements detailed in the Operations Manual or communicated directly by Chatime.