Who pays for the training of a replacement Managing Owner or Operating Manager for a Chatime franchise?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
g, development, and operation of the Chatime Network and does not directly or indirectly engage in any other business or other activity that requires any significant management responsibility or time commitments or that may otherwise conflict with Franchisee's obligations under this Agreement.
- (5) If the Managing Owner or Operating Manager does not satisfactorily complete the initial training program or if we determine that such person cannot satisfactorily complete the training program, or if the Managing Owner or Operating Manager ceases to act as such, then Franchisor may elect to train, at Franchisee's expense, a qualified replacement (who must be reasonably acceptable to us) within 30 days. 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.
- (6) The Managing Owner and the Operating manager must attend and complete to Franchisor's satisfaction such training programs as Franchisor prescribes including the initial training referred to in clause 3 (which may be conducted in whole or in part at any place designated by Franchisor).
- (7) You agree to ensure that the Managing Owner, Operating Manager, and any other management personnel of Franchisee shall execute and deliver a Confidentiality and Non-Competition Agreement in the form attached as Exhibit 4. At our request, you will submit to us a copy of all such written agreements.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime FDD, the franchisee is responsible for the expense of training a replacement Managing Owner or Operating Manager. Specifically, if the current Managing Owner or Operating Manager does not complete the initial training program satisfactorily, or ceases to act in that role, Chatime has the option to train a qualified replacement, but the franchisee will bear the cost. The replacement must also be reasonably acceptable to Chatime, adding a layer of approval to the process.
This stipulation places a financial burden on the franchisee to ensure that their management staff is adequately trained and in place. If a replacement is needed, the franchisee must be prepared to cover the costs of that training. This is a fairly standard practice in franchising, as the franchisee is generally responsible for the costs associated with their employees.
Furthermore, Chatime retains the right to appoint a manager for the franchised business if a new Managing Owner or Operating Manager is pending training or if the business is not being managed properly in Chatime's judgment. The franchisee is obligated to pay for this appointed manager as described in clause 14, adding another potential expense if management issues arise. This highlights the importance of maintaining qualified and trained personnel to avoid additional costs and maintain operational standards.
In addition to replacement training, the FDD also states that if a franchisee wants to replace the Managing Owner, the prospective new Managing Owner must attend and satisfactorily complete Chatime's initial training program at the franchisee's expense. This reinforces the franchisee's responsibility for training costs associated with management personnel.