Under what condition can a Chatime franchisee or guarantor engage in a business or activity that would otherwise be prohibited?

According to Chatime's 2025 Franchise Disclosure Document, a franchisee or guarantor can engage in a business or activity that would otherwise be prohibited if Chatime has given its prior written consent. This allowance is outlined within the broader context of acceptable conduct for developers and guarantors, indicating that similar considerations apply to franchisees. This condition provides a degree of flexibility, allowing franchisees and guarantors to pursue other ventures, provided they obtain explicit approval from Chatime.

This prior written consent requirement ensures that Chatime maintains control over potential conflicts of interest or activities that could negatively impact the Chatime brand or business operations. It allows Chatime to assess each situation individually and determine whether the proposed activity is compatible with the franchisee's obligations and the overall interests of the franchise system. Without this consent, franchisees and guarantors are generally restricted from engaging in activities that compete with or detract from their Chatime franchise.

For a prospective Chatime franchisee, this means that while there are restrictions on outside business activities, there is a formal process for seeking an exception. If a franchisee or guarantor wishes to be involved in another business, they must seek and obtain written permission from Chatime. This process likely involves providing detailed information about the proposed business or activity, its potential impact on the Chatime franchise, and assurances that it will not conflict with the franchisee's obligations. Franchisees should be prepared to provide comprehensive documentation and be transparent about their intentions to facilitate the approval process.

It is also important to note that even with written consent, Chatime retains the right to take action if the outside activity ultimately harms the Chatime business. The FDD stipulates that if a franchisee or guarantor breaches the non-compete clause, they must account for and pay to Chatime all compensation, profits, or other benefits derived from the breach. This underscores the importance of adhering to the terms of the franchise agreement and ensuring that any outside activities are fully disclosed and approved by Chatime.