Are Chatime franchisees obligated to purchase supplies only from 'Approved Suppliers'?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
y action, suit, or proceeding, and of the issuance of any order, writ, injunction, award, or decree of any court, agency, or other governmental instrumentality, which may adversely affect the operation or financial condition of Franchisee or the Outlet.
5.8 Products and Supply Arrangements
(1) Franchisee must establish and maintain supply arrangements on competitive terms and conditions for Products, the shop-fitting and signage of the Outlet and equipment to be sold by or used in the operation of the Outlet. Such suppliers will be subject to Franchisor's prior written approval and, upon approval, will be deemed to be Approved Suppliers. Franchisor may, at any time and in its discretion, revoke its approval of any Approved Supplier. Franchisor may itself be an Approved Supplier.
(2) If Franchisee requests approval of a new alternate supplier, Franchisee shall provide Franchisor with samples of the proposed alternate supplier's product, all information and back-up documentation requested by Franchisor concerning the proposed alternate supplier and its products, and access to inspect the proposed alternate supplier's production facilities, and Franchisee shall pay Franchisor for all of its costs and expenses in evaluating and deciding upon the request, including without limitation out of pocket expenses, compensation for the time spent evaluating the request, and overhead expenses.
(3) Approval of a supplier by Franchisor may be conditional on the supplier meeting Franchisor's quality and standards requirements. Franchisor may require any supplier applying for approval to allow Franchisor to inspect the proposed supplier's facilities to assist Franchisor in determining if the proposed supplier meets Franchisor's criteria.
(4) Franchisee acknowledges that Franchisor may from time to time vary the range of Products.
(5) Unless otherwise provided in writing by Franchisor, Franchisee must purchase all Raw Materials sold in the Outlet from Franchisor on the then-current Terms of Trade. Otherwise, Franchisee must purchase all Raw Materials from suppliers approved by Franchisor in writing.
(6) Franchisee must ensure that all Raw Materials and other Products and equipment used in the operation of the Outlet comply with the System Standards.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, franchisees are generally required to purchase products, including raw materials, from 'Approved Suppliers.' These suppliers are subject to Chatime's prior written approval, which Chatime can revoke at any time. Chatime may also become an approved supplier.
Specifically, franchisees must acquire all products, including raw materials, required to prepare products on the Chatime menu only from Approved Suppliers. Unless otherwise provided in writing by Chatime, franchisees must purchase all raw materials sold in the outlet from Chatime on the then-current Terms of Trade. Otherwise, franchisees must purchase all raw materials from suppliers approved by Chatime in writing.
If a franchisee wants to use a new supplier, they must provide samples, information, and documentation about the proposed supplier and allow Chatime to inspect the supplier's facilities. The franchisee will also be responsible for paying Chatime's costs and expenses for evaluating and deciding on the request. Approval of a supplier may depend on meeting Chatime's quality and standards requirements.