What rights are granted to the developer as part of the 'Development Business' for Chatime?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
(17) Development Business means the rights granted to Developer by virtue of this Agreement to conduct Developer's Operation including:
(a) Granting Franchises to Developer to establish and operate Outlets; and
(b) Training, supporting, motivating, managing, and administering the Chatime Network in the Development Area.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the 'Development Business' grants specific rights to the developer. These rights include the ability to grant franchises to establish and operate Chatime outlets within a defined Development Area. Furthermore, the developer is authorized to train, support, motivate, manage, and administer the Chatime network within their designated Development Area. This encompasses overseeing the operational aspects and ensuring adherence to Chatime's standards and practices.
These rights are granted for an initial term and are limited to the specified Development Area. The developer is not authorized to franchise or operate outlets outside of this area, and they must ensure that their affiliates also adhere to this geographical restriction. Chatime retains all rights regarding outlets, intellectual property, and the sale of raw materials and other products worldwide, including the right to operate or franchise outlets outside the developer's designated area.
Chatime also retains the right to provide, franchise, license, sell, distribute, and market any services or products through special distribution channels, such as airports, train stations, hotels, convention centers, sports complexes, and hospitals, both inside and outside the Development Area. This ensures that Chatime can pursue opportunities in non-traditional locations without being restricted by the developer's exclusive territory. The developer is obligated to comply with a Development Quota for each Development Period, with the franchisor determining whether these obligations have been met based on the number of operational outlets at the end of each period.
The developer must diligently perform their obligations, continuously using their best efforts to promote and enhance the Chatime network and the operation of outlets within the Development Area during the initial term. Failure to meet the Development Quota can result in consequences, as determined by the franchise agreement. This structure ensures that the developer is actively engaged in expanding and supporting the Chatime brand within their territory while Chatime retains control over broader strategic initiatives and alternative distribution channels.