What is the 'Option' that Chatime grants to the Developer regarding a new term?
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)
According to Chatime's 2025 Franchise Disclosure Document, Chatime grants the developer an option regarding a new term. This 'Option' allows the developer to operate in the territory and enter into a new franchise agreement with Chatime, based on Chatime's then-current franchise agreement, for the new term, subject to specific conditions.
To exercise this option, the developer must notify Chatime in writing of their intention to do so, not more than 12 months and not less than 8 months before the end of the initial term. This notification period is crucial for the developer to ensure they meet the deadlines and do not miss the opportunity to renew their franchise agreement.
The option is conditional upon the developer having substantially complied with all material provisions of the agreement throughout the initial term. Additionally, there must be no outstanding breaches of the agreement or any collateral agreements that have not been resolved at the time of giving notice and at the end of the initial term. These conditions highlight the importance of maintaining a good standing with Chatime throughout the franchise term to be eligible for renewal.