What are some examples of non-traditional distribution channels where Chatime may establish stores, even within a franchisee's territory?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
m remaining on the Franchise Agreement for the previous location.
Regardless of either proximity to your Territory, or your Chatime Store, or any actual or threatened impact on sales of your franchise business, we may (i) use the Trademarks and System in connection with establishing and operating Chatime Stores at any location outside your Territory, (ii) use the Trademarks or other marks in connection with selling or distributing any goods or services anywhere in the world through alternative channels of distribution such as the Internet or other electronic communications, telephone, mail, or similar channels regardless of the destination of the products or services, and we may expand our sale of products on a local, regional, national, or international basis; you may not distribute products through alternative channels of distribution and we are under no obligation to compensate you for our soliciting or accepting orders within your Territory through alternative channels of distribution, (iii) use the Trademarks or System in connection with establishing and operating Chatime Stores in any non-traditional or special distribution channel (i.e., airports, train stations, gas/convenience stores, limited-access highway food facilities, hospitals, convention centers, hotels, casinos and resorts, stadiums, arenas, ballparks, movie theaters, entertainment and sports complexes, department stores and "big box" superstores, supermarkets, festivals, fairs and other mass gathering locations or events, offices, factories, military facilities, and any government buildings or other institutional facilities), including special distribution channels located within your Territory, (iv) without using the Trademarks, acquire, establish, or operate any business of any kind at any location anywhere in the world, or (v) use the Trademarks in connection with soliciting or directing advertising or promotional materials to customers anywhere in the world.
As part of your review of a proposed Territory, we may, but are not required to, provide you with certain information such as (i) maps indicating existing Chatime Stores' and/or competitors' locations and may highlight potential areas of interest to us, and (ii) demographic reports (including population and median household income) generated by third parties. It is important you validate the information we provide to you.
If you sign a Multi-Unit Development Agreement, you are obligated to open a certain minimum number of Chatime Stores ("Outlets") in your Development Territory in accordance with a specified schedule. ("Development Quota"). You will negotiate the size of your designated Development Territory with us based on your Development Quota.
Your Multi-Unit Development Agreement sets out one or more protected geographic areas ("Development Territory") identified specifically for the development of new Outlets. This does not mean that you have any exclusive right to any potential customer base for your Outlets. You have no rights relating to the distribution or competitive brands that we control. You have no rights relating to the alternative distribution channels referenced above.
Source: Item 12 — Territory (FDD pages 35–38)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime retains the right to establish stores in non-traditional venues, even within a franchisee's designated territory. These non-traditional or special distribution channels include locations such as airports, train stations, gas/convenience stores, limited-access highway food facilities, hospitals, convention centers, hotels, casinos and resorts, stadiums, arenas, ballparks, movie theaters, entertainment and sports complexes, department stores and "big box" superstores, supermarkets, festivals, fairs and other mass gathering locations or events, offices, factories, military facilities, and any government buildings or other institutional facilities.
This means that a Chatime franchisee's territory is not exclusive with respect to these types of locations. Chatime can open company-owned or franchise locations in these venues regardless of their proximity to an existing franchisee's store or any potential impact on their sales. This is a significant consideration for prospective franchisees, as it limits the scope of their territorial protection and introduces potential competition within their market area.
For franchisees with a Multi-Unit Development Agreement, a similar condition applies. While the franchisee may have a designated Development Territory, Chatime retains the right to establish stores in non-traditional locations within that territory. The franchisee has no rights relating to alternative distribution channels. This right is only a first opportunity and is conditional upon the franchisee's compliance with all agreements, meeting expansion schedule criteria, and obtaining permission from the party controlling the special distribution opportunities. This further emphasizes the non-exclusivity of the territory with respect to these special venues.
Prospective franchisees should carefully consider the implications of these non-traditional distribution channels and how they might affect their business. It would be prudent to discuss with Chatime their plans for developing such locations within the franchisee's target market to better understand the potential competitive landscape.