What is a condition for a Chatime Developer to exercise the option to renew the development agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
partition rights under this Agreement or any of the Franchise Agreements without Franchisor's prior written consent. Franchisor may in its absolute discretion withhold such consent. Any unpermitted grant shall be null and void.
2.7 Option for New Term
- (1) Franchisor grants to Developer the option to:
- (a) Operate as Developer in the Development Area; and
- (b) Enter into a new development business agreement with Franchisor (based on Franchisor's then-current multi-unit development business agreement),
for the New Term subject to the conditions set out in these clauses 2.7(1) to 2.7(4) (Option).
- (2) Developer must notify Franchisor in writing of its intention to exercise the Option not more than 12 Months and not less than 8 Months prior to the end of the Initial Term.
- (3) The Option is subject to all of the following conditions being satisfied:
- (a) At the time of notifying Franchisor of its intention to exercise the Option, Developer delivers to Franchisor in writing a proposed development schedule (Revised Development Schedule) for the New Term.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a Chatime Developer has to meet certain conditions to exercise the option to renew their development agreement for a New Term. One key condition is that the Developer must provide written notification to Chatime of their intent to exercise this option. This notification must be given within a specific timeframe: not more than 12 months and not less than 8 months before the end of the initial term of the agreement.
In addition to providing timely notice, the Developer must also submit a proposed development schedule for the New Term, referred to as the Revised Development Schedule, along with their notification. Chatime then has a 3-month period to review this schedule. During this time, Chatime will either approve the proposed schedule or attempt to negotiate a mutually agreeable Revised Development Schedule with the Developer. The FDD emphasizes that both parties are expected to negotiate in good faith and act reasonably throughout this process.
Furthermore, the Developer must have substantially complied with all material provisions of the existing agreement throughout its initial term. Also, at the time the Developer gives notice of their intent to renew and at the end of the initial term, there must be no outstanding breaches of the agreement or any associated collateral agreements that have not been resolved. Meeting these conditions ensures that the Developer has maintained a good standing with Chatime and is prepared to continue developing Chatime stores in the designated area.