Does the Chatime franchise agreement specify which 'Alternative Methods of Distribution' are permitted?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
It is Agreed
1 Definitions and Interpretation
1.1 Definitions
The following words have these meanings in this Agreement unless the contrary intention appears:
- (1) Affiliate means any Person that directly or indirectly Controls, that is directly or indirectly Controlled by, or that is under Common Control or Controlling Interest with, a specified Person.
- (2) Agency means any governmental entity or agency.
- (3) Agreement means this document, including any schedule or attachments to it.
- (4) Alternative Methods of Distribution means any alternative distribution methods or channels (such as sales to grocery stores, sales via direct mail, subscriptions, or the internet, or other alternative distribution methods or channels.
- (5) Approved Supplier means Franchisor or a supplier or suppliers approved in writing by Franchisor for the supply of Products and equipment to Developer and/or Franchisees.
- (6) Business Day means a day that is not a Saturday or Sunday or any other day which is a
public holiday in the place where an act is to be performed or a payment is to be made.
(7) Business Hours means the hours of operation of each Outlet pursuant to any Legal Requirements and/or the terms of any lease or other document conferring a right to occupy the premises at which an Outlet is located.
(8) Chatime Menu means the food and beverage items specified in the Operations Manual or otherwise in writing by Franchisor which must be offered for sale by Franchisees from Outlets and includes, as relevant, any specifications in relation to those products.
(9) Chatime Network means the network of Chatime Outlets in the Development Area.
(10) Chatime Store means a full service retail store that:
(a) Offers Products listed on the Chatime Menu for sale;
(b) Meets Franchisor's standards and specifications;
(c) Operates under the Marks and the System; and
(d) is operated by Developer pursuant to a valid Franchise Agreement.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the franchise agreement defines 'Alternative Methods of Distribution' to include several specific examples. This definition clarifies the channels Chatime may use to distribute products and services outside of traditional franchise locations.
The agreement specifies that 'Alternative Methods of Distribution' means any alternative distribution methods or channels such as sales to grocery stores, sales via direct mail, subscriptions, or the internet, or other alternative distribution methods or channels. This gives Chatime flexibility in how it reaches customers, potentially expanding its market presence beyond brick-and-mortar stores.
For a prospective franchisee, this clause indicates that Chatime retains the right to explore various distribution avenues, some of which may compete with or complement the franchisee's operations. It is important for franchisees to understand that Chatime could sell products through channels like grocery stores or online platforms within or outside their territory, which could impact their sales. Franchisees should discuss with Chatime how these alternative distribution methods will be managed to minimize potential conflicts and maximize overall brand growth.