Are other sources of distribution used by Chatime allowed to compete with franchisees?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
d territory ("Territory") identified in your Franchise Agreement. You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
The designated territorial rights to the protected territory granted to you under the Franchise Agreement are contingent upon complying with your obligations under the Franchise Agreement. We have the right to terminate or reduce your designated territorial rights or to terminate your Franchise Agreement if you fail to comply with your obligations under the Franchise Agreement.
There is no minimum Territory. Your Territory will typically be a two-mile radius around your approved location, unless your approved location is located in a major metropolitan downtown area or similarly-situated/populated central business district (a "Central Business District"). If your approved location is located in a Central Business District, your Territory may be limited to a geographic area comprised of anywhere from a radius of two blocks to two miles around your approved location, as we deem appropriate in our discretion. The size of your Territory may vary from the territory granted to other franchisees based on the location and demographics surrounding your approved location.
The boundaries of your Territory may be described in terms of zip codes, streets, landmarks (both natural and man-made) or county lines, or otherwise delineated on a map. The sources we use to determine the population within your Territory will be publicly available population information (such as data published by the U.S. Census Bureau or other governmental agencies and commercial sources).
You do not have the right to distribute products through alternative channels of distribution. We may use alternative channels of distribution for our products and trademarks and we may expand our sale of products on a local, regional, national, or international basis. We have the absolute right to sell, distribute or license others to distribute products identified by the Trademarks (or by any other name or trademark) anywhere and in any form (e.g., in packaged form or otherwise), regardless of the proximity to your location, through any alternative distribution methods or channels (such as grocery stores, the internet, or other alternative distribution methods or channels). These other sources of distribution may compete with you. We reserve the absolute right to distribute goods or services through the use of the Internet or other electronic communications, telephone, mail, or similar methods, under our trademarks or any other marks, regardless of the destination of the products or services.
Source: Item 12 — Territory (FDD pages 35–38)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, other distribution channels utilized by Chatime are allowed to compete with franchisees. Specifically, Item 12 of the FDD outlines that franchisees do not receive an exclusive territory and may face competition from other franchisees, company-owned outlets, alternative distribution channels, and competitive brands controlled by Chatime. Chatime retains the absolute right to sell, distribute, or license others to distribute products identified by their trademarks through any alternative distribution methods or channels, such as grocery stores or the internet, regardless of their proximity to a franchisee's location. These alternative distribution sources are explicitly allowed to compete with franchisees.
Chatime is under no obligation to compensate franchisees for business conducted or orders solicited within their territory through these alternative channels. This includes distribution through the Internet or other electronic communications, telephone, or mail. Chatime also retains the sole right to use its trademarks on the Internet, including websites and domain names. Franchisees are not allowed to maintain a website or social media accounts without prior written consent from Chatime, and if a franchisee-developed website is approved, Chatime may require that the domain name and home page belong to them and be licensed back to the franchisee during the term of the agreement.
For franchisees considering a Multi-Unit Development Agreement, Chatime clarifies that while a Development Territory is assigned, this does not grant exclusive rights to any potential customer base. Franchisees operating under a Multi-Unit Development Agreement may also face competition from other franchisees, company-owned outlets, alternative distribution channels, and competitive brands controlled by Chatime. Although multi-unit developers may have the first opportunity for special distribution opportunities inside their Development Territory, this is conditional upon compliance with the agreement, meeting expansion criteria, and obtaining permission from the party controlling the special distribution opportunities.