Is a Chatime developer permitted to bring any actions itself relating to the Intellectual Property?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (4) Developer must co-operate fully with Franchisor in relation to any actions conducted under this clause 9.4 and must not bring any actions itself relating to the Intellectual Property.
- (5) Save for remittance of Costs under clause 9.4(3) (if any), Franchisor will be entitled to receive the proceeds of all actions conducted under this clause 9.4.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a developer is explicitly prohibited from independently initiating legal actions concerning Chatime's intellectual property. The FDD states that the developer must cooperate fully with Chatime in any actions related to intellectual property but cannot bring any actions on their own. Chatime retains the sole discretion to decide whether to start or defend legal proceedings related to its intellectual property.
This means a Chatime developer must immediately inform Chatime of any potential or actual infringement threats to the brand's intellectual property within their development area. However, the developer's role is limited to providing assistance to Chatime, and they cannot take independent legal action.
Chatime will cover the costs of any legal proceedings it authorizes related to intellectual property. Furthermore, Chatime is entitled to receive all proceeds from any legal actions taken regarding its intellectual property, except for the reimbursement of costs to the developer, if any, under specific circumstances. This arrangement underscores Chatime's control over its brand and legal strategy, ensuring a unified approach to protecting its intellectual property rights.