How does Chatime determine if a developer has met their development obligations?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) Developer must comply with the Development Quota for each Development Period. The determination as to whether Developer has met its development obligations will be made by Franchisor and based on the number of Outlets opened and operating at the end of a Development Period.
- (2) For the purpose of determining whether the development obligations in clause 2.4(1) have been satisfied, an Outlet that has been opened and in operation and is subsequently rendered inoperable by fire or other casualty (and which is due to no fault of Developer or the applicable Franchisee) or required to be closed due to a Force Majeure Event will be counted towards the satisfaction of the Development Quota. Any other Outlet must be opened and operating in compliance with the applicable Franchise Agreement to be counted towards satisfaction of the Development Quota.
- (3) Developer agrees that during the Initial Term, it will at all times faithfully, honestly, and diligently perform its obligations under this Agreement and continuously use its best efforts to promote and enhance the development of the Chatime Network and operation of Outlets within the Development Area.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime determines whether a developer has met their development obligations based on the number of Chatime outlets opened and operating at the end of each development period. The franchisor, Chatime, makes this determination.
For an outlet to count toward the development quota, it must be open and operating in compliance with the applicable Franchise Agreement. However, there is an exception: an outlet that was open and operating but becomes inoperable due to fire, casualty (not caused by the developer or franchisee), or a Force Majeure Event will still be counted toward the quota.
The developer is obligated to diligently perform their duties under the agreement and continuously use their best efforts to promote and enhance the Chatime network and the operation of outlets within the designated development area during the initial term of the agreement.