Can Chatime sell its assets and intellectual property to a third party?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
(k) be acquired, directly or indirectly, in whole or in part, by any person(s) who provide products or services similar or dissimilar to those provided by Chatime Stores;
(1) Franchisor, on behalf of itself and its Affiliates, retains all rights with respect to Outlets, the Intellectual Property and the sale of Raw Materials and other Products and any other products and services, anywhere in the world including, without limitation, the rights to:
- (a) operate or grant others the right to operate Outlets under or in association with the Marks or any other trademarks or service marks at such locations outside the Territory, and on such terms and conditions as Franchisor, in its sole discretion, deems appropriate;
(b) provide, franchise, license, sell, distribute and market any services or products (under any brand, including but not limited to our Marks) through any Special Distribution Channels, in or outside your Territory, including, without limitation, through airports, train stations, hotels, convention centers, sport complexes, hospitals, or festivals.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime retains specific rights regarding its outlets, intellectual property, and the sale of raw materials and other products. Chatime has the right to be acquired, directly or indirectly, in whole or in part, by any person who provides products or services similar or dissimilar to those provided by Chatime Stores. This clause explicitly allows for the possibility of Chatime being acquired by another entity, regardless of whether that entity's products or services are similar to Chatime's.
Chatime also retains the right to operate or grant others the right to operate outlets under its trademarks outside a franchisee's designated territory, and on terms Chatime deems appropriate. Furthermore, Chatime can provide, franchise, license, sell, distribute, and market any services or products through any special distribution channels, whether inside or outside a franchisee's territory. These retained rights provide Chatime with substantial flexibility in how it manages and expands its brand and operations.
These provisions mean that a Chatime franchisee's rights are limited to their specific territory and initial term, and they do not extend to influencing Chatime's broader strategic decisions regarding its intellectual property or overall business operations. The franchisee should be aware that Chatime can make decisions about its brand and operations that may impact the franchisee's business, such as introducing new products or distribution channels, or even being acquired by a company with potentially competing interests.