Can Chatime, as the Franchisor, revoke its approval of any Approved Supplier at any time?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
(7) Franchisor or its Affiliates may receive payments from Approved Suppliers on account of such suppliers' dealings with Franchisee and may use all amounts so received without restriction and for any purpose Franchisor or its Affiliates deem appropriate (unless Franchisor or its Affiliates agree otherwise with the supplier).
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime has the discretion to revoke approval of any Approved Supplier at any time. As a franchisee, you must establish and maintain supply arrangements on competitive terms and conditions for products, shop-fitting, signage, and equipment. These suppliers are subject to Chatime's prior written approval, and once approved, they are designated as Approved Suppliers.
This means that even if a supplier is initially approved, Chatime can later decide to remove them from the approved list. This could impact a franchisee's existing supply arrangements and potentially require them to find a new supplier that meets Chatime's standards. Chatime may also be an Approved Supplier.
If a franchisee wants to request approval for a new alternate supplier, they must provide Chatime with samples of the supplier's product, all requested information and documentation, and access to inspect the supplier's production facilities. The franchisee is also responsible for paying Chatime's costs and expenses for evaluating the request, including out-of-pocket expenses, compensation for time spent on the evaluation, and overhead expenses. Approval of a supplier may be conditional on meeting Chatime's quality and standards requirements, and Chatime may inspect the supplier's facilities to determine if they meet these criteria.
Franchisees must purchase all raw materials from Chatime on the current Terms of Trade, unless otherwise provided in writing by Chatime. Otherwise, franchisees must purchase all Raw Materials from suppliers approved by Chatime in writing. All raw materials, other products, and equipment used in the operation of the outlet must comply with the System Standards. Chatime or its affiliates may receive payments from Approved Suppliers based on their dealings with franchisees and can use these amounts without restriction for any purpose they deem appropriate, unless otherwise agreed with the supplier.