What efforts must a Chatime franchisee undertake to ensure timely payments in US dollars?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
6.9 Exchange Controls
- (1) Franchisee must use its best efforts to obtain any consents or authorizations which may be necessary in order to permit timely payments in Dollars of all amounts payable pursuant to this Agreement.
- (2) If at any time, any legal restriction is imposed upon the purchase of Dollars or the transfer to or credit of a non-resident party with payments in Dollars, Franchisee must notify Franchisor immediately. While such restrictions are in effect, Franchisor may require payment in any currency designated by Franchisor that is available to Franchisee or, at Franchisor's option, may require Franchisee to deposit all amounts due but unpaid as a result of such a restriction in any type of account, in any bank or institution in the Territory designated by Franchisor. Franchisor will be entitled to all interest earned on such deposits. Franchisor may also elect to receive payment in the form of products or services available to Franchisee, the value of which will be based on the actual cost of such products or services to Franchisee. If payment is made in products or services, Franchisee agrees to deliver such products or services to Franchisor or its designated agent or shipper within the Territory.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a franchisee must exert their best efforts to secure any necessary consents or authorizations that might be required to facilitate timely payments in U.S. dollars for all amounts due under the Franchise Agreement. This indicates that franchisees are responsible for navigating any potential bureaucratic or regulatory hurdles to ensure payments are made promptly and in the correct currency.
Furthermore, the FDD outlines specific actions to be taken if legal restrictions impede the purchase of U.S. dollars or the transfer of payments to a non-resident party. In such instances, the franchisee is obligated to immediately notify Chatime. While these restrictions are in place, Chatime has the option to demand payment in an alternative currency that is accessible to the franchisee. Alternatively, Chatime may instruct the franchisee to deposit the due but unpaid amounts into an account within the territory, designated by Chatime, with Chatime retaining any interest earned on these deposits. Chatime can also opt to receive payment in the form of products or services available to the franchisee, with the value based on the franchisee's actual cost for those products or services. If payment is rendered in products or services, the franchisee is responsible for delivering them to Chatime or its designated agent within the territory.
These stipulations highlight the franchisee's responsibility to proactively address potential obstacles to U.S. dollar payments and to remain flexible in accommodating alternative payment methods should restrictions arise. This could involve engaging with local financial institutions, understanding currency exchange regulations, and maintaining open communication with Chatime regarding any payment-related challenges. The franchisee bears the onus of ensuring compliance with these payment terms to avoid potential breaches of the franchise agreement.