But store officials say they don't plan to have any moving-out sales before packing up and concentrating resources on the company's nine other stores.
Marketing Director Carrie Colliton said the decision to close was a tough one, but the poor economy forced the company to re-evaluate each store.
"We have 10 stores, and we have to look at which stores make the most sense to work on and which stores make the most sense to close," she said.
Colliton cited poor visibility from the street, high rent and the expensive cost of Chapel Hill advertising as reasons for the Chapel Hill location's financial situation.
Employees from the Chapel Hill location will not be let go but rather transferred to other locations, such as stores in Greensboro, Raleigh and Winston-Salem.
"We're sad about moving the Chapel Hill store, but there were not any viable shopping centers to move to," Colliton said.
Although the Franklin Street store is the only one in the chain that will close, it's not the only one that has been affected by a slump in the economy.
Colliton said the Charlotte location plans to move to what the company hopes will be a more profitable location.
She added that the weak economy is not just affecting independent record stores.