Under what circumstances will a Chatime outlet that is not operating still count towards the Development Quota?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) Developer must comply with the Development Quota for each Development Period. The determination as to whether Developer has met its development obligations will be made by Franchisor and based on the number of Outlets opened and operating at the end of a Development Period.
- (2) For the purpose of determining whether the development obligations in clause 2.4(1) have been satisfied, an Outlet that has been opened and in operation and is subsequently rendered inoperable by fire or other casualty (and which is due to no fault of Developer or the applicable Franchisee) or required to be closed due to a Force Majeure Event will be counted towards the satisfaction of the Development Quota. Any other Outlet must be opened and operating in compliance with the applicable Franchise Agreement to be counted towards satisfaction of the Development Quota.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, whether a developer has met their development obligations is determined by the number of Chatime outlets opened and operating at the end of a Development Period. However, there are exceptions where an outlet that is not operating can still count toward meeting the quota.
Specifically, a Chatime outlet that was initially opened and operating but becomes inoperable due to fire or other casualty (not caused by the developer or franchisee) will still be counted towards the Development Quota. Similarly, an outlet required to close due to a Force Majeure Event will also be counted. A Force Majeure Event is an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or an event described by the legal term "act of God".
Any other Chatime outlet must be opened and operating in compliance with the applicable Franchise Agreement to be counted towards satisfying the Development Quota. This means that if an outlet is not operating due to reasons other than those specified (fire, casualty, or Force Majeure Event) or is not in compliance with the Franchise Agreement, it will not be counted toward meeting the development obligations.