Does a Chatime franchisee have any rights relating to the distribution or competitive brands that Chatime controls?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
d 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).
You do not have the right to distribute products through alternative channels of distribution. We may use alternative channels of distribution for our products and trademarks and we may expand our sale of products on a local, regional, national, or international basis. We have the absolute right to sell, distribute or license others to distribute products identified by the Trademarks (or by any other name or trademark) anywhere and in any form (e.g., in packaged form or otherwise), regardless of the proximity to your location, through any alternative distribution methods or channels (such as grocery stores, the internet, or other alternative distribution methods or channels). These other sources of distribution may compete with you.
Source: Item 12 — Territory (FDD pages 35–38)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, franchisees have limited rights regarding distribution and competitive brands controlled by Chatime. For a single-unit franchisee, the Franchise Agreement does not grant an exclusive territory, meaning they may face competition from other franchisees, outlets owned by Chatime, or other distribution channels and competitive brands that Chatime controls.
For franchisees who sign a Multi-Unit Development Agreement, while they negotiate a Development Territory, this does not grant any exclusive rights to any potential customer base. The FDD explicitly states that multi-unit franchisees have no rights relating to the distribution or competitive brands that Chatime controls. Under certain conditions, a multi-unit franchisee will have the first opportunity for special distribution opportunities inside their Development Territory, but this is conditional on compliance with agreements, meeting expansion schedule criteria, and the permission of the party that controls the special distribution opportunities.
Chatime retains the right to use alternative channels of distribution for its products and trademarks, expanding sales on various levels (local, regional, national, or international). This includes the right to sell, distribute, or license others to distribute products identified by Chatime's trademarks through any alternative distribution methods or channels, such as grocery stores or the internet, regardless of proximity to a franchisee's location. Chatime also reserves the right to distribute goods or services through the internet or other electronic communications, without any obligation to compensate franchisees for business conducted within their territory through such means. These factors highlight the importance of understanding the competitive landscape and Chatime's distribution strategies before investing in a franchise.