For Chatime, what occupancy right must the Developer hold for the premises at all Outlets?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
rior of such a new Outlet according to Franchisor's latest design guidelines, as determined in its sole discretion.
- (4) Promptly after receipt by Developer of written approval from Franchisor to establish a new Outlet at the proposed Site, Developer must itself procure an Occupancy Right in relation to the approved Site.
- (5) Any relocation of an Outlet beyond a 2-km radius of the existing site and beyond 90 days of closing the Outlet at the original location is deemed opening a New Outlet and subject to all applicable provisions under this Agreement, and Franchisor shall be entitled to the New Outlet Fee.
3.4 Lease of Site of Each Outlet
- (1) Developer must hold the lease or other Occupancy Right approved by Franchisor for the premises at all Outlets or have step-in rights approved by Franchisor;
- (2) Franchisee must obtain a Lease Addendum, signed by Franchisee, Franchisor, and the Landlord, in the form required under the unit Franchise Agreement, which gives the Franchisor the option but not the obligation to assume the Lease if the Franchisee defaults on the Lase, and which requires the Landlord to give written notice to the Franchisor of any defaults by the Franchisee..
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a Developer must hold the lease or other Occupancy Right approved by Chatime for the premises at all Outlets, or have step-in rights approved by Chatime. The FDD defines "Occupancy Right" as any right to occupy the premises of an Outlet including as lessee, sublessee, licensee, or the holder of some other interest in the premises conferring an enforceable right to use or occupy them.
This means that a Chatime Developer needs to ensure they have a legally sound agreement in place that allows them to operate the Chatime store at its location. This can be a traditional lease, a sublease, a license, or another form of agreement that gives them the right to use the property. Chatime maintains the right to approve the occupancy right that the Developer obtains.
Furthermore, unless prohibited by law or commercially impractical, the Developer must ensure that all leases, subleases, licenses, or other documents granting an occupancy right to Developer, include a provision which permits Developer's rights under such leases, subleases, licenses, or other documents to be assigned or otherwise transferred to Chatime or its nominee, at Chatime's option, on termination or expiration of this Agreement. This provision protects Chatime's interests by allowing them to take over the location if the Developer's agreement is terminated or expires. This is a fairly standard practice in franchising, as it allows the franchisor to maintain control over key locations and ensure business continuity.
Additionally, the franchisee must obtain a Lease Addendum, signed by the franchisee, franchisor, and the Landlord, which gives Chatime the option, but not the obligation, to assume the Lease if the Franchisee defaults on the Lease, and which requires the Landlord to give written notice to Chatime of any defaults by the Franchisee. This addendum is a crucial safeguard for Chatime, allowing them to step in and take over the lease if the franchisee fails to meet their obligations. This protects Chatime's brand and ensures the continued operation of the outlet.