What fee is Chatime entitled to if an Outlet relocation is considered opening a New Outlet?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
In the judgment of Franchisor and Franchisee, there is a change in the character of the location of a site sufficiently detrimental to its business potential to warrant its relocation, Franchisor will not unreasonably withhold permission for relocation of the Outlet from the site in question to a site which meets the then-current Territory Site Selection Criteria, subject to the requirements of this Agreement, and subject to the Franchisee executing a Release in the form attached as Exhibit 1. Any such relocation will be at Franchisee's sole expense. Franchisee must seek and obtain Franchisor's approval of the replacement site and development of the new outlet, in accordance with the terms of this Agreement. No New Outlet Fee will be payable to Franchisor provided the replacement site is within a 2 mile radius of the existing site and the new Outlet at the replacement site is opened and operated by the same Franchisee within 90 days of closing the Outlet at the original location. Notwithstanding the foregoing, if the lease term for a new approved location extends beyond the remaining term of the Franchise Agreement, then Franchisor shall extend the Franchise Agreement to align with the end date of the new lease for the new location, and Franchisee shall pay Franchisor a pro rata portion of the then-current New Outlet Fee based on the length of the extension of the term of the Franchise Agreement, provided that the lease term for any new approved location shall not exceed ten years.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a franchisee may be required to pay a pro rata portion of the New Outlet Fee if relocating an existing outlet results in an extension of the franchise agreement. Specifically, this applies if the lease term for the new location extends beyond the original term of the Franchise Agreement.
The franchisee will only be charged a portion of the New Outlet Fee, calculated on a pro rata basis, corresponding to the length of the extension to the Franchise Agreement. The document also specifies that the lease term for the new location cannot exceed ten years.
Notably, Chatime will not charge a New Outlet Fee if the replacement site is within a 2-mile radius of the original location and the new outlet opens within 90 days of the original outlet's closure, provided it is operated by the same franchisee. This provides some flexibility for franchisees needing to move locations without incurring additional fees, as long as they stay within a limited area and timeframe.