Is Chatime obligated to operate and manage a franchisee's business if the franchisee ceases operation or abandons the franchise?
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, Chatime does not have an obligation to manage a franchisee's business if operations cease or the franchise is abandoned. However, Chatime retains the right, but not the obligation, to appoint a manager if the franchised business is not being managed properly in their judgment.
If Chatime chooses to appoint a manager, the franchisee is responsible for paying for the manager's services as described in clause 14 of the franchise agreement. This clause is triggered if the Managing Owner or Operating Manager does not complete the initial training program satisfactorily, cannot complete the training program, or ceases to act in their role.
This arrangement provides Chatime with a mechanism to ensure the continued operation and brand integrity of the Chatime store, even if the franchisee is unable to manage the business effectively. However, the ultimate decision to step in and manage the store rests with Chatime, and the franchisee bears the financial burden of this intervention.