What condition must be met by the Chatime Franchisor to confirm that the Developer has satisfied all the conditions for exercising the option for a new term?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
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. During the 3-Month period following Franchisor's receipt of the Revised Development Schedule, Franchisor will either notify Developer in writing that the Revised Development Schedule is acceptable or will attempt to negotiate a Revised Development Schedule that is mutually agreeable to Franchisor and Developer. The parties will negotiate any Revised Development Schedule in good faith and act reasonably in all negotiations.
- (b) If the Revised Development Schedule proposed by Developer under clause 2.7(3)(a) is accepted by Franchisor, or if a Revised Development Schedule is mutually agreed upon within the 3-Month period specified in clause 2.7(3)(a), Franchisor will deliver to Developer its then-standard multi-unit development business agreement (which may contain different terms and conditions to those set out in this Agreement and other significant provisions, but deleting any references to enter into a new development business agreement for a new term unless agreed to the contrary by Franchisor) which will reflect the agreed Revised Development Schedule.
- (c) Developer has substantially complied with all material provisions of this Agreement throughout the Initial Term.
- (d) At the date of giving Franchisor notice of its intention to exercise the Option and as at the end of the Initial Term, there is no outstanding breach of this Agreement or any Collateral Agreement which has not been remedied.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a Developer's option to enter into a new franchise agreement for a New Term is contingent upon several conditions. The Developer must notify Chatime in writing of their intention to exercise this option between 8 and 12 months before the end of the initial term.
Furthermore, the Developer must provide Chatime with a proposed development schedule for the new term, referred to as the Revised Development Schedule, when notifying Chatime of their intent to exercise the option. Chatime then has a 3-month period to either accept the proposed schedule or negotiate a mutually agreeable one with the Developer. Both parties are expected to negotiate in good faith and act reasonably during this process.
To successfully exercise the option, the Developer must have substantially complied with all material provisions of the existing agreement throughout the initial term. Additionally, at the time of notifying Chatime of the intention to exercise the option and at the end of the initial term, there must be no outstanding breaches of the agreement or any related collateral agreements that have not been resolved. If all these conditions are met, Chatime will then deliver its standard multi-unit development business agreement, reflecting the agreed-upon Revised Development Schedule, to the Developer.