Under the Chatime agreement, when is a relocation of an Outlet considered opening a new Outlet?

According to Chatime's 2025 Franchise Disclosure Document, a relocation of an existing Chatime outlet is considered the opening of a new outlet under specific circumstances. If a franchisee relocates an outlet beyond a 2-mile radius from its original location, or if the new outlet isn't opened and operating within 90 days of the closure of the original location, it is treated as a new outlet.

This distinction is significant because Chatime is entitled to charge a New Outlet Fee in such cases. This fee compensates Chatime for the resources and support provided in establishing a new location, including site selection assistance, training, and marketing support. The New Outlet Fee is specified in Section 5 of Schedule 1, though the exact amount is not specified in this excerpt.

For a prospective Chatime franchisee, this policy highlights the importance of careful planning when considering a relocation. Staying within the 2-mile radius and adhering to the 90-day timeframe allows the franchisee to avoid incurring additional fees. Franchisees should carefully evaluate potential relocation sites and timelines to minimize costs and ensure a smooth transition. It is also important to note that the franchisor's approval is required for any relocation, regardless of the distance.

This policy is fairly standard in the franchise industry, as franchisors typically want to ensure that relocations are strategically sound and do not negatively impact the brand or other franchisees in the area. The New Outlet Fee helps to offset the franchisor's costs associated with supporting the new location and maintaining brand consistency.