Can Chatime impose different requirements for Franchisee to maintain its right to continue operating the Franchised Business?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) Franchisor grants to Franchisee the option to:
(a) Operate as Franchisee in the Territory; and
(b) Enter into a new franchise agreement with Franchisor (based on Franchisor's thencurrent franchise agreement), for the New Term subject to the conditions set out in these clauses 2.6(1) to 2.6(4) (the Option).
(2) Franchisee must notify Franchisor in writing of its intention to exercise the Option not more than 12 Months and not less than 8 Months prior to the end of the Initial Term.
(3) Franchisee's Option pursuant to clause 2.6(2) is subject to all of the following conditions being satisfied:
(a) Franchisee has substantially complied with all material provisions of this Agreement throughout the Initial Term.
(b) At the date of giving Franchisor notice of its intention to exercise the Option and as at the end of the Initial Term, there is no outstanding breach of this Agreement or any Collateral Agreement which has not been remedied.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a franchisee's option to enter into a new franchise agreement for a New Term is contingent upon several conditions. The franchisee must notify Chatime in writing of its intention to exercise the option between 8 and 12 months before the end of the initial term.
To maintain the right to continue operating, the franchisee must have substantially complied with all material provisions of the existing agreement throughout the initial term. Additionally, at the time of giving notice to exercise the option and at the end of the initial term, there must be no outstanding breaches of the agreement or any collateral agreements that have not been resolved.
These conditions ensure that only franchisees who have consistently met Chatime's standards and fulfilled their contractual obligations are granted the opportunity to continue operating under a new franchise agreement. This protects the brand's reputation and maintains consistency across all franchise locations. Franchisees should be aware of these requirements and diligently adhere to the franchise agreement to secure their option for a new term.