Does Chatime reserve the right to establish or operate outlets in my Development Territory through non-traditional channels?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
ve any other rights to pursue special distribution opportunities.
Unless we have terminated the exclusivity of your Development Rights, we will not establish or operate, nor license any other person to establish or operate, an Outlet under the System and the Trademarks at any traditional location in your Development Territory during the term of your Multi-Unit Development Agreement except for Outlets already established or permitted by us prior to the execution of your Multi-Unit Development Agreement, and except for any non-traditional or special distribution channel (i.e., airports, train stations, gas/convenience stores, limited-access highway food facilities, hospitals, convention centers, hotels, casinos and resorts, stadiums, arenas, ballparks, movie theaters, entertainment and sports complexes, department stores and "big box" superstores, supermarkets, festivals, fairs and other mass gathering locations or events, offices, factories, military facilities, and any government buildings or other institutional facilities), including special distribution channels located within your Development Territory.
You will not receive an exclusive development territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Each Outlet's location in your Development Territory must be approved by us in writing and meet our then-current real estate, brand and design standards. We will approve each additional location under the Multi-Unit Development Agreement using our then-current site criteria. For each Outlet, you must comply with all your obligations to us and sign our then-current form of the Franchise Agreement with all then-current ongoing fees. The then-current Franchise Agreement may contain materially different terms and conditions than your original Franchise Agreement.
If you do not continue to meet our then-current guidelines for multi-unit development and ownership, we may terminate your Development Rights, vary your Development Territory, and/or terminate the exclusivity attached to the Development Rights in our discretion (following which we may ourselves develop and operate franchises in your Development Territory or may grant a right to a third party to develop and operate franchises in your Development Territory).
We do not require minimum sales quotas for each individual Outlet; provided, however, that you must have open and operating no fewer than the number of Outlets specified in your Development Quota.
There are no restrictions on our right or the right of our affiliates to sell goods or services that are the same as or similar to those that you will sell.
Item 13: Trademarks
Your Franchise Agreement gives you the non-exclusive right to operate your Chatime Store under the Trademarks.
Source: Item 12 — Territory (FDD pages 35–38)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if you sign a Multi-Unit Development Agreement, Chatime retains the right to establish or operate outlets through non-traditional channels within your Development Territory. These non-traditional channels include locations such as airports, train stations, gas/convenience stores, limited-access highway food facilities, hospitals, convention centers, hotels, casinos and resorts, stadiums, arenas, ballparks, movie theaters, entertainment and sports complexes, department stores and "big box" superstores, supermarkets, festivals, fairs and other mass gathering locations or events, offices, factories, military facilities, and any government buildings or other institutional facilities.
This means that even if you have a protected Development Territory for traditional Chatime stores, Chatime can still open or license others to open Chatime locations in non-traditional venues within that territory. As a franchisee, you would not have any exclusive rights to these alternative channels. This could potentially lead to competition within your own territory from Chatime outlets in these non-traditional locations.
Chatime also retains the right to use their trademarks and system to establish Chatime stores in any non-traditional or special distribution channel, regardless of its proximity to your territory or any impact on your sales. Furthermore, Chatime can sell or distribute goods and services through alternative channels like the internet, without any obligation to compensate you for business conducted within your territory through these means. This highlights the importance of understanding the potential for competition from both traditional and non-traditional channels when considering a Chatime franchise.