Is Chatime permitted to be an Approved Supplier for its franchisees?

According to Chatime's 2025 Franchise Disclosure Document, Chatime may be an approved supplier for its franchisees. The FDD defines "Approved Supplier" as "Franchisor or a supplier or suppliers approved in writing by Franchisor for the supply of Products and equipment to Developer and/or Franchisees." This means Chatime itself can be designated as an approved source from which franchisees must purchase products and equipment.

Chatime franchisees are required to buy raw materials from approved suppliers. Specifically, franchisees must purchase all raw materials sold in the outlet from Chatime on the then-current Terms of Trade, unless otherwise provided in writing by Chatime. Otherwise, the franchisee must purchase all Raw Materials from suppliers approved by Chatime in writing.

This arrangement allows Chatime to maintain quality control and standardization across all franchise locations. However, it also means that franchisees may be limited in their ability to negotiate prices or find alternative suppliers, potentially impacting their profitability. It is also noted that Chatime or its affiliates may receive payments from Approved Suppliers on account of such suppliers' dealings with Franchisee and may use all amounts so received without restriction and for any purpose Chatime or its Affiliates deem appropriate (unless Chatime or its Affiliates agree otherwise with the supplier).