What rights are granted to a Chatime multi-unit developer upon executing the Multi-Unit Development Agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
We also offer multi-unit development agreement franchises to qualified persons who must establish certain minimum numbers of Chatime Stores within a designated geographic territory (a "Development Territory"). If we grant you a multi-unit development agreement franchise, you will execute our standard form of multi-unit development agreement attached as Exhibit C (the "Multi-Unit Development Agreement") and be granted the right to begin opening Chatime Stores in your Development Territory (the "Development Rights"). Your master franchise business includes the obligation to open a certain number of Chatime Stores in your Development Territory in accordance with a specified schedule (the "Development Quota"). Upon establishing each additional outlet under the Multi-Unit Development Agreement, you will be required to sign our then-current Franchise Agreement, which may differ from the current Franchise Agreement included with this Franchise Disclosure Document. If you fail to meet your Development Quota or fail to comply with any financial obligation relating to the Development Rights, we may terminate your Development Rights, reduce or eliminate your Development Territory or the territorial protections provided under your Multi-Unit Development Agreement, or take other action we deem appropriate in our discretion.
Source: Item 1 — The Franchisor, and Any Parents, Predecessors, and Affiliates (FDD pages 6–9)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a multi-unit developer who enters into a Multi-Unit Development Agreement with Chatime is granted 'Development Rights.' These rights allow the developer to begin opening Chatime stores within a specific geographic area known as the 'Development Territory'.
However, these Development Rights come with obligations. The multi-unit developer must adhere to a 'Development Quota,' which is a pre-determined schedule for opening a certain number of Chatime stores within their Development Territory. For each new store established under the Multi-Unit Development Agreement, the developer is required to sign Chatime's then-current Franchise Agreement. It's important to note that this agreement may differ from the one included in the current Franchise Disclosure Document, meaning the terms could change over time.
Chatime retains significant control over the Development Rights. If a developer fails to meet their Development Quota or doesn't comply with financial obligations related to the Development Rights, Chatime has the power to take corrective actions. These actions can include terminating the Development Rights, reducing or eliminating the Development Territory, removing territorial protections initially provided in the Multi-Unit Development Agreement, or other actions deemed appropriate by Chatime. This highlights the importance of carefully reviewing the terms of the Multi-Unit Development Agreement and understanding the specific obligations and potential consequences of non-compliance.