Does Chatime have the right to acquire and continue to operate any business operating under different trademarks outside the franchisee's territory?

According to Chatime's 2025 Franchise Disclosure Document, Chatime retains specific rights regarding business operations and trademarks, particularly outside a franchisee's territory or development area. Chatime has the explicit right to acquire and continue to operate any business, directly or indirectly, even if it operates under different trademarks outside the franchisee's designated territory. This clause also extends to Chatime acquiring and retaining the rights and obligations of any franchisor or licensor of a business similar to a Chatime store, even if that business operates under different trademarks outside the franchisee's territory.

This provision means that a Chatime franchisee's territory is not protected from Chatime itself operating similar businesses under different brands. Chatime could potentially own or acquire a competing business near a franchisee's location. This could impact the franchisee's revenue and market share, as Chatime is not restricted from diversifying its business interests beyond the Chatime brand within or outside the franchisee's territory.

For a prospective franchisee, this highlights the importance of understanding the competitive landscape and Chatime's broader business strategy. While the franchise agreement grants certain territorial rights for Chatime stores, it does not prevent Chatime from engaging in other business ventures that could compete with the franchisee's operations. Therefore, due diligence should include researching any existing or potential competing businesses owned or operated by Chatime in the surrounding area.