Under what condition can a Chatime franchisee engage in a business or activity that would otherwise be a conflict of interest?

According to Chatime's 2025 Franchise Disclosure Document, a franchisee's Operating Manager is restricted from engaging in conflicting business activities. The Operating Manager must devote at least 38 hours per week to the Chatime store's daily operations and cannot participate directly or indirectly in any other business or activity that demands significant management responsibility or time commitments, or that conflicts with the franchisee's obligations under the Franchise Agreement.

However, the FDD also states that nothing prevents a Covenantor (or any of its affiliates) from owning less than 5%, by value, of securities in a listed corporation or engaging or being concerned or interested in the Franchised Business in accordance with this Agreement.

In essence, while the Operating Manager must be fully dedicated to the Chatime franchise, a franchisee (or their affiliates) can hold a minor, passive investment in a publicly traded company, even if that company is in a similar business. This exception allows for limited investment diversification without violating the non-compete provisions, as long as it doesn't involve active management or control of a conflicting business. Prospective franchisees should carefully consider these restrictions and seek clarification from Chatime regarding any specific outside interests they may have.