Can Chatime revoke its approval of an Approved Supplier?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
5.8 Products and Supply Arrangements
(1) Franchisee must establish and maintain supply arrangements on competitive terms and conditions for Products, the shop-fitting and signage of the Outlet and equipment to be sold by or used in the operation of the Outlet. Such suppliers will be subject to Franchisor's prior written approval and, upon approval, will be deemed to be Approved Suppliers. Franchisor may, at any time and in its discretion, revoke its approval of any Approved Supplier. Franchisor may itself be an Approved Supplier.
(2) If Franchisee requests approval of a new alternate supplier, Franchisee shall provide Franchisor with samples of the proposed alternate supplier's product, all information and back-up documentation requested by Franchisor concerning the proposed alternate supplier and its products, and access to inspect the proposed alternate supplier's production facilities, and Franchisee shall pay Franchisor for all of its costs and expenses in evaluating and deciding upon the request, including without limitation out of pocket expenses, compensation for the time spent evaluating the request, and overhead expenses.
(3) Approval of a supplier by Franchisor may be conditional on the supplier meeting Franchisor's quality and standards requirements. Franchisor may require any supplier applying for approval to allow Franchisor to inspect the proposed supplier's facilities to assist Franchisor in determining if the proposed supplier meets Franchisor's criteria.
(4) Franchisee acknowledges that Franchisor may from time to time vary the range of Products.
(5) Unless otherwise provided in writing by Franchisor, Franchisee must purchase all Raw Materials sold in the Outlet from Franchisor on the then-current Terms of Trade. Otherwise, Franchisee must purchase all Raw Materials from suppliers approved by Franchisor in writing.
(6) Franchisee must ensure that all Raw Materials and other Products and equipment used in the operation of the Outlet comply with the System Standards.
(7) Franchisor 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 Franchisor or its Affiliates deem appropriate (unless Franchisor or its Affiliates agree otherwise with the supplier).
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime has the authority to revoke its approval of any Approved Supplier at any time and at its discretion. This means that even if a franchisee has established a supply arrangement with a supplier that Chatime initially approved, Chatime can later decide to remove that supplier from the approved list.
This ability to revoke approval gives Chatime significant control over the supply chain and the quality of products used in its franchises. It allows Chatime to ensure that all suppliers meet its standards and to make changes as needed to maintain consistency across all locations. For a prospective franchisee, this means they must be prepared for the possibility that they may need to switch suppliers if Chatime revokes approval of their current supplier.
If a Chatime franchisee requests approval of a new alternate supplier, the franchisee must provide samples of the proposed supplier's product, all information and back-up documentation requested by Chatime concerning the proposed alternate supplier and its products, and access to inspect the proposed alternate supplier's production facilities. The franchisee is also responsible for paying Chatime for all costs and expenses in evaluating and deciding upon the request, including out of pocket expenses, compensation for the time spent evaluating the request, and overhead expenses. Approval of a supplier by Chatime may be conditional on the supplier meeting Chatime's quality and standards requirements, and Chatime may require any supplier applying for approval to allow Chatime to inspect the proposed supplier's facilities to assist Chatime in determining if the proposed supplier meets Chatime's criteria.
Franchisees are required to purchase all raw materials from Chatime or suppliers approved by Chatime in writing, ensuring that all raw materials and other products and equipment used in the operation of the outlet comply with the System Standards. 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).