If Chatime's Franchisor operates and manages a Franchise, who pays the management fee?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if the Franchisor deems that a franchised business is not being managed properly, Chatime has the right to appoint a manager for the Franchised Business. In this event, the franchisee is responsible for paying the manager as described in clause 14.
This means that under certain circumstances, Chatime can step in to manage a franchise and the franchisee will be responsible for covering the costs of this management. This clause protects Chatime's brand and operational standards, but it also places a financial burden on the franchisee if their store is deemed to be poorly managed.
Prospective franchisees should carefully review clause 14 within the Franchise Agreement to fully understand the specific payment terms and conditions associated with this type of management intervention. It would be prudent to discuss with Chatime the criteria they use to determine if a store is not being managed properly and what steps a franchisee can take to avoid such a situation.