If Chatime distributes goods or services in a franchisee's territory through alternative distribution methods, is Chatime obligated to compensate the franchisee?

According to Chatime's 2025 Franchise Disclosure Document, Chatime is not obligated to compensate franchisees if it distributes goods or services within their territory through alternative distribution methods. Chatime retains the absolute right to sell, distribute, or license others to distribute products identified by their trademarks through any alternative distribution methods or channels, such as grocery stores or the internet, regardless of the proximity to a franchisee's location. These alternative distribution channels may compete directly with the franchisee's Chatime store.

Chatime also reserves the right to distribute goods or services through the internet, electronic communications, telephone, mail, or similar methods under its trademarks, regardless of where the products or services are ultimately delivered. The FDD explicitly states that if Chatime chooses to distribute goods or services in a franchisee's territory through these alternative methods, it has no obligation to compensate the franchisee for any business conducted or orders solicited or accepted within the territory through such means.

This policy has significant implications for prospective Chatime franchisees. It means that Chatime can pursue various distribution strategies, including online sales or partnerships with other businesses, without sharing any of the resulting revenue with franchisees, even if those sales occur within the franchisee's designated territory. This lack of territorial exclusivity and the potential for direct competition from the franchisor's alternative channels are important factors for potential franchisees to consider when evaluating the Chatime franchise opportunity.