If a Chatime franchisee requests approval of a new alternate supplier, what is the franchisee required to provide to the franchisor?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a franchisee who wants to use a new supplier must first get approval from Chatime. To get this approval, the franchisee must give Chatime samples of the potential supplier's products, all the information and paperwork Chatime asks for about the supplier and its products, and access to the supplier's production facilities for inspection.
Furthermore, the Chatime franchisee is responsible for covering all of Chatime's costs to review and decide on the request. These costs include out-of-pocket expenses, compensation for the time spent evaluating the request, and overhead expenses. This means a franchisee could incur significant costs simply to have a new supplier considered.
Chatime's approval of a supplier can depend on whether the supplier meets Chatime's standards for quality. Chatime can also require any supplier applying for approval to allow Chatime to inspect their facilities to help decide if the supplier meets Chatime's criteria. This ensures that all suppliers meet Chatime's standards, maintaining consistency across all franchise locations.
This process protects the Chatime brand by ensuring consistent quality and standards but also places the burden of cost and information gathering on the franchisee. A prospective franchisee should consider these potential costs and requirements when evaluating the financial implications of operating a Chatime franchise.