During the Restraint Period, is a Chatime franchisee prohibited from employing someone who has been employed by another business in the last 12 months?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
I agree that I shall not, and I will ensure that any person or entity which I control shall not:
- (d) procure, employ, seek to employ or engage, or appoint in any capacity (whether as a consultant, director or otherwise), any person who is or has been in the 12 months prior to such action an employee or independent contractor of the Franchisor or any Chatime Store Business
during the Restraint Period in the Restraint Area.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a franchisee faces restrictions on employing individuals connected to Chatime during the Restraint Period. Specifically, the franchisee is prohibited from employing or engaging anyone who has been an employee or independent contractor of Chatime or any Chatime Store Business within the 12 months immediately preceding the potential employment. This restriction applies during the Restraint Period and within the Restraint Area.
The Restraint Period, as defined in the FDD, lasts for two years following the expiration or termination of the franchise agreement. The Restraint Area includes the franchisee's territory, any area within 25 miles of any outlet operated by the franchisee, and any area within 25 miles of any Chatime store. This means that for two years after the franchise agreement ends, the franchisee cannot hire anyone who worked for Chatime or a Chatime store in a broad geographical area.
This non-employment clause is designed to protect Chatime's business interests by preventing former employees or contractors from using their knowledge of Chatime's operations to benefit a competing business. It also prevents competitors from poaching Chatime's talent. For a prospective franchisee, this means they need to be aware of these restrictions when hiring, especially if they are located near other Chatime locations or if they plan to hire individuals with prior experience in the bubble tea industry. Failing to comply with these restrictions could result in legal consequences for the franchisee.