Does the Chatime Franchise Agreement grant an exclusive territory to the franchisee?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
Your Franchise Agreement grants you the right to operate a single Chatime Store in a location approved by usin a designated territory ("Territory") identified in your Franchise Agreement. You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
The designated territorial rights to the protected territory granted to you under the Franchise Agreement are contingent upon complying with your obligations under the Franchise Agreement. We have the right to terminate or reduce your designated territorial rights or to terminate your Franchise Agreement if you fail to comply with your obligations under the Franchise Agreement.
There is no minimum Territory. Your Territory will typically be a two-mile radius around your approved location, unless your approved location is located in a major metropolitan downtown area or similarly-situated/populated central business district (a "Central Business District"). If your approved location is located in a Central Business District, your Territory may be limited to a geographic area comprised of anywhere from a radius of two blocks to two miles around your approved location, as we deem appropriate in our discretion. The size of your Territory may vary from the territory granted to other franchisees based on the location and demographics surrounding your approved location.
The boundaries of your Territory may be described in terms of zip codes, streets, landmarks (both natural and man-made) or county lines, or otherwise delineated on a map. The sources we use to determine the population within your Territory will be publicly available population information (such as data published by the U.S. Census Bureau or other governmental agencies and commercial sources).
Source: Item 12 — Territory (FDD pages 35–38)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, franchisees will not receive an exclusive territory. The Franchise Agreement grants the right to operate a single Chatime store in an approved location within a designated territory, but this territory is not exclusive. This means that franchisees may face competition from other franchisees, outlets owned by Chatime, other distribution channels, or competitive brands controlled by Chatime.
The size of the designated territory typically extends to a two-mile radius around the approved location. However, for locations in major metropolitan downtown areas or similarly populated central business districts, the territory may be limited to a geographic area ranging from a two-block radius to two miles, as determined by Chatime. The boundaries of the territory may be defined using zip codes, streets, landmarks, county lines, or delineated on a map. Population data from sources like the U.S. Census Bureau or other governmental and commercial sources will be used to determine the population within the territory.
Chatime retains the right to use its trademarks and system to establish and operate Chatime stores outside the franchisee's territory, sell goods and services through alternative channels of distribution (such as the Internet), and establish stores in non-traditional locations like airports or convenience stores, even within the franchisee's territory. Chatime also has the right to acquire or operate any business without using the trademarks anywhere in the world and use the trademarks in connection with advertising to customers worldwide. These factors could significantly impact a franchisee's potential customer base and sales.
For franchisees who sign a Multi-Unit Development Agreement, Chatime will not establish or operate, nor license any other person to establish or operate, an Outlet under the System and the Trademarks at any traditional location in your Development Territory during the term of your Multi-Unit Development Agreement except for Outlets already established or permitted by us prior to the execution of your Multi-Unit Development Agreement, and except for any non-traditional or special distribution channel. However, franchisees do not have any exclusive right to any potential customer base for their Outlets and have no rights relating to the distribution or competitive brands that Chatime controls.