Does Chatime limit the number of potential suppliers considered for approval?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
We may limit the number of potential suppliers that we consider for approval. For some categories of products, we may designate a third party or ourselves as an exclusive supplier. We currently have exclusive supplier arrangements for some categories of products or services.
You must purchase or lease all of your products, ingredients, goods, supplies, equipment, inventory, insurance, payroll service, real estate and project management services, and accounting services, from us or one of our approved suppliers which may be one of our affiliates.
Our affiliates La Kaffa and Chatime Wholesale LLC are currently the only approved suppliers for certain products and supplies such as ingredients, supplies, and equipment. Officers of the franchisor own an indirect ownership interest in La Kaffa and Chatime Wholesale LLC.
We estimate that your required purchases from approved suppliers will represent approximately 85% of the total purchases for establishing and operating your Chatime Store. We did not have any revenue in 2024 from required purchases and leases of products and services by franchisees. Our affiliates had revenue of $396,652.37 from required purchases and leases of products and services by franchisees in 2024.
We have the right to require you to purchase any items or services necessary to operate your Chatime Store. Currently, we have approved suppliers for the following items: (i) food products and ingredients; (ii) real estate and construction management services; (iii) construction due diligence (unless proposed site does not require such due diligence); (iv) architectural, engineering and design services related to the establishment of your Chatime Store; (v) construction site visits; (vi) signage; (vii) furniture and equipment that must be used in connection with the operation of the Chatime Store; (viii) technology set-up and ongoing services; (viii) branded and proprietary ingredients, inventory and supplies; (ix) payroll and rostering services; (x) human resource services; and (xi) initial local marketing and location launch events. Certain food products that easily spoil (e.g., fresh fruits and milk) may be purchased by you locally with our prior approval.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 22–25)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime may limit the number of potential suppliers that they consider for approval. For some product categories, Chatime may designate a third party or themselves as the exclusive supplier. Chatime currently has exclusive supplier arrangements for some categories of products or services.
Chatime requires franchisees to purchase or lease products, ingredients, goods, supplies, equipment, inventory, insurance, payroll service, real estate and project management services, and accounting services from Chatime or one of its approved suppliers, which may include Chatime affiliates. La Kaffa and Chatime Wholesale LLC are currently the only approved suppliers for certain products and supplies such as ingredients, supplies, and equipment. Officers of the franchisor own an indirect ownership interest in La Kaffa and Chatime Wholesale LLC.
Chatime estimates that required purchases from approved suppliers will represent approximately 85% of the total purchases for establishing and operating a Chatime store. In 2024, Chatime's affiliates had revenue of $396,652.37 from required purchases and leases of products and services by franchisees. This means a significant portion of a franchisee's expenses will be directed to approved suppliers, some of whom may be affiliated with Chatime, potentially impacting profitability and requiring careful consideration of these costs.
Chatime also has approved suppliers for various items, including food products and ingredients, real estate and construction management services, construction due diligence, architectural, engineering and design services, construction site visits, signage, furniture and equipment, technology set-up and services, branded ingredients, inventory and supplies, payroll and rostering services, human resource services, and initial local marketing and location launch events. However, certain food products that easily spoil, such as fresh fruits and milk, may be purchased locally with Chatime's prior approval.