How long is the 'New Term' for a Chatime franchise?
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)
The 2025 Chatime Franchise Disclosure Document states that Chatime grants the franchisee the option to operate in the territory and enter into a new franchise agreement for the 'New Term.' However, the document does not explicitly state the length of the 'New Term'.
To exercise this option, a franchisee must notify Chatime in writing of their intention to renew the franchise, doing so not more than 12 months and not less than 8 months before the end of the initial term.
It is important to note that the option for a new term is conditional. The franchisee must have substantially complied with all material provisions of the franchise agreement throughout the initial term. Additionally, there cannot be any outstanding breaches of the agreement or any collateral agreements at the time of giving notice or at the end of the initial term.
Prospective franchisees should clarify the exact length of the 'New Term' with Chatime prior to signing the franchise agreement. Understanding the duration of the renewal term is crucial for long-term business planning and investment decisions.