Who can terminate the exclusive, worldwide, royalty-free license granted to Chatime for developer's improvements?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) If Developer's rights to or intellectual property rights in Developer's Improvements are not capable of assignment to Franchisor, Developer grants to Franchisor or its nominee as and when the intellectual property rights are created an exclusive, worldwide, royalty free, fully assignable perpetual license in respect of Developer's Improvements, which may only be terminated by Franchisor, for Franchisor to use Developer's Improvements and grant others the right to use Developer's Improvements.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if a developer creates improvements to Chatime's intellectual property during the initial term of the agreement, Chatime receives certain rights. Specifically, if the developer's rights to these improvements cannot be directly assigned to Chatime, the developer grants Chatime an exclusive, worldwide, royalty-free, and fully assignable perpetual license to use these improvements.
This license grants Chatime the right to use the developer's improvements and to allow others to use them as well. Importantly, the FDD states that only Chatime has the right to terminate this license.
For a prospective Chatime franchisee, this means that any intellectual property improvements they develop for the Chatime system automatically become the property of Chatime, or Chatime gains the exclusive rights to use them. The franchisee has no right to terminate Chatime's use of these improvements.