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What are the obligations of a Chatime franchisee regarding trademarks (Item 9) and how does this relate to the trademarks licensed in Item 13?

Chatime Franchise · 2025 FDD

Answer from 2025 FDD Document

es to the benefit of Franchisor; and

  • (3) When this Agreement ends, Franchisee is not entitled to any payment from Franchisor for goodwill which may exist in relation to The Franchised Business.
  • 11.6 Franchisee and Guarantor Must Not Register Similar Intellectual Property

Franchisee and Guarantor must:

  • (1) If it is the owner of any intellectual property (e.g., business or corporate names, trademarks, domain names) similar or identical to the Intellectual Property in the Territory, immediately upon execution of this Agreement, take all steps necessary to transfer ownership of that intellectual property to Franchisor at Franchisee's cost;
  • (2) If, during the Initial Term, either Franchisee or any Guarantor registers any intellectual property (e.g., business or corporate names, trademarks, domain names) similar or identical to the Intellectual Property in the Territory, the relevant party must immediately upon such registration, take all steps necessary to transfer ownership of that intellectual property to Franchisor at Franchisee's cost; and
  • (3) Not, except as otherwise agreed or directed by Franchisor in writing, register any intellectual property (e.g., business or corporate names, trademarks, domain names) similar or identical to the Intellectual Property or that contains or consists of any Intellectual Property or anything that is substantially identical or deceptively similar thereto or otherwise relates to the Chatime brand or the System. In particular, if Franchisee or Guarantor is a corporation, each must not use the word "Chatime" or any other similar word or derivatives of that word in its corporate name, with acknowledgement that the factors determining similarity of trademarks as stated above include, without limitation, the appearances, concepts, pronunciations, designated classes and designated goods and services of trademarks.

11.7 Franchisee's Improvements

  • (1) If any Franchisee's Improvements are developed by or on behalf of Franchisee during the Initial Term from which Franchisee obtains any intellectual property rights, Franchisee assigns all of Franchisee's rights to and intellectual property in Franchisee's Improvements to Franchisor or its nominee as and when the intellectual property rights are created, free of all encumbrances.
  • (2) If Franchisee's rights to or intellectual property rights in Franchisee's Improvements are not capable of assignment to Franchisor, Franchisee grants to Franchisor or its nominee as and when the intellectual property rights are created an exclusive, worldwide, royalty free, fully assignable perpetual license for Franchisee's Improvements, which may only be terminated by Franchisor, for Franchisor to use Franchisee's Improvements and grant others the right to use Franchisee's Improvements.

What This Means (2025 FDD)

According to Chatime's 2025 Franchise Disclosure Document, a franchisee has specific obligations regarding intellectual property, including trademarks. Chatime grants franchisees the non-exclusive right to operate a Chatime store under its trademarks. Chatime has a license from La Kaffa to sublicense the use of these trademarks in the continental United States, Hawaii, and Guam, as per a Trademark License Agreement dated September 23, 2022. This license extends for thirty years with a renewal option for an additional ten years.

If a franchisee owns any intellectual property similar to Chatime's, they must transfer ownership to Chatime at their own cost upon signing the agreement. Similarly, any intellectual property registered by the franchisee during the term that is similar to Chatime's must also be transferred to Chatime at the franchisee's expense. Franchisees are prohibited from registering intellectual property similar to Chatime's without written consent from Chatime.

These obligations ensure that Chatime maintains control over its brand and intellectual property. The definition of Intellectual Property includes business names, trademarks, confidential information, the business system, franchise documents, databases, POS software, and various other proprietary materials. This comprehensive definition highlights the importance Chatime places on protecting its brand identity and operational methods. The restrictions on franchisees registering similar intellectual property are standard practice in franchising to prevent brand confusion and protect the franchisor's trademarks.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.