Is a Chatime franchisee permitted to own or operate more than one outlet, and if so, under what conditions?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
2.1 Grant of Rights for Initial Term
- (1) Franchisor grants to Franchisee and Franchisee accepts the right to use the Intellectual Property in the conduct of the Franchised Business at the Premises for the Initial Term, subject to the terms and conditions of this Agreement.
- (2) Franchisee may itself own or operate one and only one Outlet in the Territory and only at the Premises.
- (3) The rights granted to Franchisee pursuant to this Agreement are limited to the Premises and apply only for the Initial Term. Franchisee acknowledges and agrees that it is not being granted any rights to franchise and that it will not operate or grant Franchises, nor solicit prospective franchisees, whether in or outside the Territory.
2.2 Designated Territory
(1) During the term of the Franchise, we will not establish or operate, or grant any person other than you the right to establish or operate, a Chatime Store at any location in the Territory, except as may be provided in Section 2.3.
2.3 Rights Retained by Franchisor
(1) Franchisor, on behalf of itself and its Affiliates, retains all rights with respect to Outlets, the Intellectual Property and the sale of Raw Materials and other Products and any other products and services, anywhere in the world including, without limitation, the rights to:
- (a) operate or grant others the right to operate Outlets under or in association with the Marks or any other trademarks or service marks at such locations outside the Territory, and on such terms and conditions as Franchisor, in its sole discretion, deems appropriate;
(b) provide, franchise, license, sell, distribute and market any services or products (under any brand, including but not limited to our Marks) through any Special Distribution Channels, in or outside your Territory, including, without limitation, through airports, train stations, hotels, convention centers, sport complexes, hospitals, or festivals.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a franchisee is generally limited to owning and operating only one outlet within their designated territory. Specifically, the agreement grants the franchisee the right to use Chatime's intellectual property to conduct business at a single, specified premises for the duration of the initial term.
This single-unit restriction means that franchisees cannot automatically expand to multiple locations under the same franchise agreement. The document explicitly states that the franchisee is not granted any rights to franchise or operate additional franchises. This limitation is in place for the initial term of the agreement.
Chatime retains the right to operate or grant others the right to operate outlets outside the franchisee's territory. This includes the right to offer and sell products through special distribution channels such as airports, train stations, and hotels, even within the franchisee's territory. A prospective franchisee should discuss with Chatime the possibility of expanding to multiple units through a separate agreement or under what conditions they might be able to acquire rights to additional territories in the future.