What is the required action for a Chatime developer before establishing an Outlet?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
3.3 Site Approval
- (1) Developer must not establish an Outlet without first obtaining the written approval of Franchisor. To obtain approval for a given site, Developer must comply with the process set out in the Operations Manual.
- (2) Subject to a reasonable belief by Franchisor that Developer will meet all requirements under clause 4.4, Franchisor must provide its approval or non-approval to the proposed Site within 30 days after receiving all the information required by Franchisor. When Franchisor does not approve a proposed Site, it must provide to Developer a written notice:
- (a) Specifying that approval is withheld; and
- (b) Setting out why approval is withheld. If any additional information is requested by Franchisor in respect of a proposed Site, the 30 days will begin upon the date of receipt of any such additional information.
- (3) Franchisor may approve a proposed Site for a new Outlet being opened subject to reasonable conditions including, without limitation, renovating and remodeling the interior and exterior 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.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a developer must obtain written approval from Chatime before establishing an Outlet. To get this approval, the developer needs to follow the process outlined in Chatime's Operations Manual. Chatime will then provide its decision, either approving or disapproving the proposed site, within 30 days of receiving all required information from the developer, assuming Chatime believes the developer will meet all requirements. If Chatime withholds approval, it must provide a written notice explaining the reasons for the disapproval. If Chatime requests additional information about the site, the 30-day review period begins once that additional information is received.
Chatime may approve a site with specific conditions, such as requiring the developer to renovate or remodel the Outlet's interior and exterior according to Chatime's latest design guidelines. These guidelines are determined at Chatime's discretion. After receiving written approval from Chatime, the developer must then secure an Occupancy Right for the approved site, which refers to the legal right to occupy the premises, such as through a lease or license.
It is important to note that any relocation of an existing Outlet beyond a 2-kilometer radius of the original site and after 90 days of closing the original location is considered the opening of a new Outlet. In such cases, all applicable provisions of the Development Agreement apply, and Chatime is entitled to a New Outlet Fee. This ensures that significant relocations are treated as new ventures, subject to the same requirements and fees as establishing a completely new Chatime location.