Under what conditions can the license granted to Chatime Franchisor for Developer's Improvements be terminated?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) If Developer's rights to or intellectual property rights in Developer's Improvements are not capable of assignment to Franchisor, Developer grants to Franchisor or its nominee as and when the intellectual property rights are created an exclusive, worldwide, royalty free, fully assignable perpetual license in respect of Developer's Improvements, which may only be terminated by Franchisor, for Franchisor to use Developer's Improvements and grant others the right to use Developer's Improvements.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if a developer creates any improvements during the initial term and obtains intellectual property rights from them, they must assign these rights to Chatime. However, if these rights are not capable of being assigned, the developer grants Chatime an exclusive, worldwide, royalty-free, fully assignable perpetual license to use these improvements.
This license, as stated in the FDD, may only be terminated by Chatime. This means that the developer cannot terminate the license under any circumstances. Chatime retains the sole right to terminate the license at its discretion.
This clause ensures that Chatime maintains control over any innovations or improvements made to the Chatime system by its developers. It protects Chatime's intellectual property and allows them to use and sublicense these improvements as they see fit, without the developer being able to revoke that right. This is a significant consideration for potential developers, as any improvements they create become the property of Chatime, and the license for Chatime's use is perpetual and only terminable by Chatime.