If a Chatime franchisee or guarantor owns intellectual property similar to Chatime's intellectual property in the territory, what action must they take upon execution of the Franchise Agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) If it is the owner of any intellectual property (e.g., business or corporate names, trademarks, domain names) similar or identical to the Intellectual Property in the Territory, immediately upon execution of this Agreement, take all steps necessary to transfer ownership of that intellectual property to Franchisor at Franchisee's cost;
- (2) If, during the Initial Term, either Franchisee or any Guarantor registers any intellectual property (e.g., business or corporate names, trademarks, domain names) similar or identical to the Intellectual Property in the Territory, the relevant party must immediately upon such registration, take all steps necessary to transfer ownership of that intellectual property to Franchisor at Franchisee's cost; and
- (3) Not, except as otherwise agreed or directed by Franchisor in writing, register any intellectual property (e.g., business or corporate names, trademarks, domain names) similar or identical to the Intellectual Property or that contains or consists of any Intellectual Property or anything that is substantially identical or deceptively similar thereto or otherwise relates to the Chatime brand or the System. In particular, if Franchisee or Guarantor is a corporation, each must not use the word "Chatime" or any other similar word or derivatives of that word in its corporate name, with acknowledgement that the factors determining similarity of trademarks as stated above include, without limitation, the appearances, concepts, pronunciations, designated classes and designated goods and services of trademarks.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if a franchisee or their guarantor owns intellectual property similar or identical to Chatime's intellectual property within the designated territory, they must immediately take all necessary steps to transfer ownership of that intellectual property to Chatime upon execution of the Franchise Agreement. This transfer is to be done at the franchisee's own cost. This requirement extends to intellectual property such as business or corporate names, trademarks, and domain names.
Furthermore, if during the initial term of the franchise agreement, either the franchisee or any guarantor registers any intellectual property similar or identical to Chatime's intellectual property in the territory, they must also immediately take all necessary steps to transfer ownership to Chatime at the franchisee's expense. This ensures that Chatime maintains control over its brand and related intellectual assets within the territory.
Chatime also restricts franchisees and guarantors from registering any intellectual property similar or identical to Chatime's intellectual property, unless otherwise agreed or directed by Chatime in writing. This includes intellectual property that contains or consists of any of Chatime's intellectual property or anything substantially identical or deceptively similar to it, or that otherwise relates to the Chatime brand or system. If the franchisee or guarantor is a corporation, they must not use the word "Chatime" or any similar word or derivatives in their corporate name. The factors determining similarity of trademarks include appearances, concepts, pronunciations, designated classes, and designated goods and services of trademarks.