If a Chatime franchisee relocates the Outlet beyond a 2-mile radius, what fee is Chatime entitled to?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
In the judgment of Franchisor and Franchisee, there is a change in the character of the location of a site sufficiently detrimental to its business potential to warrant its relocation, Franchisor will not unreasonably withhold permission for relocation of the Outlet from the site in question to a site which meets the then-current Territory Site Selection Criteria, subject to the requirements of this Agreement, and subject to the Franchisee executing a Release in the form attached as Exhibit 1. Any such relocation will be at Franchisee's sole expense. Franchisee must seek and obtain Franchisor's approval of the replacement site and development of the new outlet, in accordance with the terms of this Agreement. No New Outlet Fee will be payable to Franchisor provided the replacement site is within a 2 mile radius of the existing site and the new Outlet at the replacement site is opened and operated by the same Franchisee within 90 days of closing the Outlet at the original location. Notwithstanding the foregoing, if the lease term for a new approved location extends beyond the remaining term of the Franchise Agreement, then Franchisor shall extend the Franchise Agreement to align with the end date of the new lease for the new location, and Franchisee shall pay Franchisor a pro rata portion of the then-current New Outlet Fee based on the length of the extension of the term of the Franchise Agreement, provided that the lease term for any new approved location shall not exceed ten years.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if a franchisee relocates their outlet, Chatime will not unreasonably withhold permission, provided the new site meets the current Territory Site Selection Criteria and the franchisee executes a release. The franchisee bears the sole expense of relocation and must obtain Chatime's approval for the new site and outlet development.
A "New Outlet Fee" is not payable to Chatime if the replacement site is within a 2-mile radius of the original site and the new outlet opens within 90 days of closing the original location. However, if the new lease extends beyond the original franchise agreement term, Chatime will extend the agreement to match the new lease's end date. In this case, the franchisee must pay Chatime a pro rata portion of the then-current New Outlet Fee, based on the length of the franchise agreement extension. The lease term for the new location cannot exceed ten years.
Therefore, if a Chatime franchisee relocates beyond a 2-mile radius, the FDD does not explicitly state a relocation fee. However, it implies that if the relocation requires an extension of the franchise agreement due to a longer lease term at the new location, a pro rata portion of the New Outlet Fee will be charged. It is important to note that the franchisee is responsible for all relocation expenses.