What happens if a Chatime franchisee abandons their operation?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
we determine that such person cannot satisfactorily complete the training program, or if the Managing Owner or Operating Manager ceases to act as such, then Franchisor may elect to train, at Franchisee's expense, a qualified replacement (who must be reasonably acceptable to us) within 30 days. Pending the appointment and training of a new Managing Owner or Operating Manager or if, in our judgment, the Franchised Business is not being managed properly, we have the right, but not the obligation, to appoint a manager for the Franchised Business and require you to pay in the manner described in clause 14.
- (6) The Managing Owner and the Operating manager must attend and complete to Franchisor's satisfaction such training programs as Franchisor prescribes including the initial training referred to in clause 3 (which may be conducted in whole or in part at any place designated by Franchisor).
- (7) You agree to ensure that the Managing Owner, Operating Manager, and any other management personnel of Franchisee shall execute and deliver a Confidentiality and Non-Competition Agreement in the form attached as Exhibit 4. At our request, you will submit to us a copy of all such written agreements. You will ensure that each such person complies with the terms of such agreement during the period that he or she is employed by or associated with your Franchised Business. Any breach of such agreement by any such person will be deemed a breach of this Agreement.
- (8) Unless otherwise provided in this Agreement, any proposed change or replacement of the Operating Manager and Managing Owner must be approved by Franchisor in writing.
- (9) Franchisee agrees to hire and maintain the number and level of additional management personnel, as may be specified by Franchisor from time to time as part of the System Standards for the development and supervision of operation of the Outlet within the Territory in accordance with this Agreement.
- (10) Franchisee will have sole authority and control over the day-to-day operations of the Franchised Business and its employees. Franchisee will be solely responsible for recruiting
and hiring the persons you employ to operate the Franchised Business.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
Based on the 2025 Chatime Franchise Disclosure Document, if a franchisee's business is not being managed properly, Chatime has the right, but not the obligation, to appoint a manager for the franchised business. The franchisee is then required to pay for this manager as described in clause 14 of the agreement.
Furthermore, Chatime requires that the day-to-day operations of the franchise are actively managed by an Operating Manager who has successfully completed Chatime's required training. This manager must devote their full time, attention, and effort to the business, providing direct supervision and at least 38 hours per week to the Chatime store's operations. The Operating Manager cannot be involved in any other business activities that might conflict with their obligations to Chatime.
If the Managing Owner or Operating Manager does not complete the initial training program satisfactorily, or if they cease to act in their role, Chatime can train a qualified replacement at the franchisee's expense within 30 days. Pending the appointment and training of a new manager, Chatime retains the right to appoint a manager if the business is not being managed properly, with the franchisee bearing the costs as outlined in the agreement.