Under what conditions might Chatime terminate a franchisee's Development Rights?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
If you do not continue to meet our then-current guidelines for multi-unit development and ownership, we may terminate your Development Rights, vary your Development Territory, and/or terminate the exclusivity attached to the Development Rights in our discretion (following which we may ourselves develop and operate franchises in your Development Territory or may grant a right to a third party to develop and operate franchises in your Development Territory).
We do not require minimum sales quotas for each individual Outlet; provided, however, that you must have open and operating no fewer than the number of Outlets specified in your Development Quota.
Source: Item 12 — Territory (FDD pages 35–38)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime may terminate a franchisee's Development Rights if the franchisee does not continue to meet the then-current guidelines for multi-unit development and ownership. If this occurs, Chatime has the discretion to take several actions, including terminating the Development Rights, changing the Development Territory, and/or ending the exclusivity associated with the Development Rights. After such a termination or alteration, Chatime may choose to develop and operate franchises within the former Development Territory itself or grant that right to a third party.
It is important to note that Chatime does not require minimum sales quotas for each individual Outlet. However, franchisees must ensure they have the minimum number of Outlets open and operating as specified in their Development Quota. This Development Quota is a critical factor in maintaining the Development Rights.
This policy has significant implications for multi-unit developers. Franchisees need to stay aligned with Chatime's evolving guidelines for multi-unit development and ownership to avoid losing their Development Rights and territory exclusivity. Prospective franchisees should carefully review the specific requirements and conditions outlined in the Multi-Unit Development Agreement and the Franchise Agreement to fully understand their obligations and the potential consequences of non-compliance.