From whom must a Chatime Developer purchase Raw Materials, and under what conditions?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
ficials and other third parties adhere to high standards of honesty, integrity, fair dealing and ethical conduct, and refrain from any practice which may be injurious to the reputation of Franchisor or Developer and the goodwill associated with the Marks and Outlets.
- (3) Developer must notify Franchisor immediately when it becomes aware of the commencement of any action, suit, or proceeding, and of the issuance of any order, writ, injunction, award, or decree of any court, agency, or other governmental instrumentality, which may adversely affect the operation or financial condition of Developer, or an Outlet.
4.5 Products and Supply Arrangements
- (1) Developer must establish and maintain supply arrangements on competitive terms and conditions for Products, the shop-fitting and signage of Outlets and equipment to be sold by or used in the operation of Outlets. Such suppliers will be subject to Franchisor's prior written approval and, upon approval, will be deemed to be Approved Suppliers. Franchisor may, at any time and in its discretion, revoke its approval of any Approved Supplier. Franchisor may itself be an Approved Supplier.
- (2) Developer acknowledges that Franchisor may from time to time vary the range of Products.
- (3) Approval of a supplier by Franchisor may be conditional on the supplier meeting Franchisor's quality and standards requirements. Franchisor may require any supplier applying for approval to allow Franchisor to inspect the proposed supplier's facilities to assist Franchisor in determining if the proposed supplier meets Franchisor's criteria.
- (4) Unless otherwise provided in writing by Franchisor, Developer must purchase all Raw Materials sold in the Outlets from Franchisor on the then-current Terms of Trade. Otherwise, Developer must purchase all Raw Materials from suppliers approved by Franchisor in writing.
- (5) Developer must ensure that all Raw Materials and other Products and equipment used in the operation of Outlets comply with the System Standards.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a Developer must purchase raw materials from specific sources. Unless Chatime provides otherwise in writing, the Developer is required to purchase all raw materials from Chatime itself, adhering to Chatime's current Terms of Trade. If not purchasing directly from Chatime, the Developer must acquire raw materials from suppliers that Chatime has approved in writing.
Chatime retains the right to modify the range of products it offers. The approval of a supplier is conditional upon meeting Chatime's quality and standards requirements. Chatime may require suppliers to allow inspection of their facilities to ensure compliance with these standards.
'Raw Materials' are defined as the materials used to produce products on the Chatime Menu, including items like coffee beans, tea, non-dairy creamer, and Chatime-exclusive concentrated juices. These materials are produced and packaged under Chatime's trademarks. This ensures consistency and quality across all Chatime locations, but it also limits the Developer's flexibility in sourcing supplies and potentially negotiating better prices.