What obligations must I fulfill to Chatime for each outlet I open in my Development Territory?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
If you sign a Multi-Unit Development Agreement, you are obligated to open a certain minimum number of Chatime Stores ("Outlets") in your Development Territory in accordance with a specified schedule. ("Development Quota"). You will negotiate the size of your designated Development Territory with us based on your Development Quota.
Each Outlet's location in your Development Territory must be approved by us in writing and meet our then-current real estate, brand and design standards. We will approve each additional location under the Multi-Unit Development Agreement using our then-current site criteria. For each Outlet, you must comply with all your obligations to us and sign our then-current form of the Franchise Agreement with all then-current ongoing fees. The then-current Franchise Agreement may contain materially different terms and conditions than your original Franchise Agreement.
If you do not continue to meet our then-current guidelines for multi-unit development and ownership, we may terminate your Development Rights, vary your Development Territory, and/or terminate the exclusivity attached to the Development Rights in our discretion (following which we may ourselves develop and operate franchises in your Development Territory or may grant a right to a third party to develop and operate franchises in your Development Territory).
We do not require minimum sales quotas for each individual Outlet; provided, however, that you must have open and operating no fewer than the number of Outlets specified in your Development Quota.
Source: Item 12 — Territory (FDD pages 35–38)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if you sign a Multi-Unit Development Agreement, you are obligated to open a minimum number of Chatime stores, referred to as "Outlets," within your designated Development Territory, following a specific schedule outlined in the agreement. This schedule is known as the "Development Quota." The size of your Development Territory will be negotiated with Chatime based on this Development Quota. Each Outlet's location must receive written approval from Chatime and adhere to their current real estate, brand, and design standards. Chatime will use its current site criteria to approve each additional location under the Multi-Unit Development Agreement.
For each Outlet you open, you must fulfill all obligations to Chatime and sign their current form of the Franchise Agreement, which includes all ongoing fees applicable at that time. It's important to note that the terms and conditions of the then-current Franchise Agreement may differ materially from your original Franchise Agreement. While Chatime does not impose minimum sales quotas for individual Outlets, you must ensure that you have the minimum number of Outlets open and operating as specified in your Development Quota.
Failure to meet Chatime's guidelines for multi-unit development and ownership could lead to the termination of your Development Rights, changes to your Development Territory, or the removal of exclusivity attached to your Development Rights. If this occurs, Chatime reserves the right to develop and operate franchises within your Development Territory themselves or grant that right to a third party. This highlights the importance of adhering to the development schedule and maintaining compliance with Chatime's standards to retain your development rights and territorial benefits.