The producer of Sonic Forces, Shun Nakamura, and head of the Sonic Team, Takashi Iizuka, both confirmed in an interview with IGN at E3 that Chao will not be featured in Sonic Forces.
Chao Garden from Sonic Adventure 2
Chao made their first appearance in Sonic Adventure, but took on an even bigger role in Sonic Adventure 2. Culminating to dozens of hours of extra content, the cute creatures had stats to raise, levels to achieve, races to win, and different evolutionary paths based on the the player’s interactions with them. The Chao have since been featured sparingly in few Sonic games, having only received cameo appearances in background billboards or dialogue.