What terms and conditions must a new lease between the Chatime Franchisor and landlord contain?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
Alternatively, in the event of a termination of the Franchise Agreement, Franchisor may elect to enter into a new lease with Landlord containing terms and conditions no less favorable than the Lease. Upon Landlord's receipt of written notice from Franchisor advising Landlord that Franchisor elects to enter into a new lease, Landlord shall execute and deliver such new lease to Franchisor for its acceptance. Landlord and Tenant shall deliver possession of the Leased Premises to Franchisor, free and clear of all rights of Tenant or third parties, subject to Franchisor executing an acceptance of the assignment of Lease or new lease, as the case may be.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if Chatime elects to enter into a new lease with the landlord, the terms and conditions must be no less favorable than the original lease. Upon receiving written notice from Chatime about its election to enter into a new lease, the landlord is required to execute and deliver the new lease to Chatime for acceptance. The landlord and tenant must deliver possession of the leased premises to Chatime, free and clear of all rights of the tenant or third parties, contingent upon Chatime executing an acceptance of the assignment of lease or new lease.
Chatime also has the right to access the leased premises to make necessary modifications to protect its proprietary system or marks or to address any defaults under the Franchise Agreement or the lease, without needing consent from the landlord or tenant and without being considered a trespasser. The landlord is required to send Chatime copies of any letters and notices given to the tenant regarding the lease or leased premises at the same time they are sent to the tenant. If the tenant fails to correct any default within the period specified in the lease, the landlord must immediately notify Chatime in writing.
The leased premises must be used solely for the operation of a Chatime store, identified by the Chatime mark or another name specified by Chatime. The landlord confirms that this use will not violate any existing exclusive rights granted to other tenants. The landlord consents to the tenant's use of Chatime's marks, signs, décor, color schemes, and other proprietary system components. During the lease term or any extensions, the landlord will not lease space to another business in the same building, shopping center, or facility that primarily serves bubble tea or other specialized tea drinks.
If the Franchise Agreement between Chatime and the tenant is terminated for any reason during the lease term or any extension, the terms of the lease addendum will govern the relationship between Chatime and the landlord. This ensures that Chatime has certain rights and protections regarding the leased premises, even if the original franchisee's agreement is terminated. This arrangement is typical in franchising, as it protects the franchisor's brand and location investment.