Does the definition of 'Disposal' for a Chatime franchise include acquiring any rights of control over the exercise of any voting rights or rights to appoint directors attaching to the ownership interest?

According to Chatime's 2025 Franchise Disclosure Document, the definition of "Disposal" in the context of transferring a franchise includes acquiring control over voting rights or the ability to appoint directors. Specifically, a "Disposal" includes entering into a transaction related to an ownership interest that results in a person acquiring any rights of control over the exercise of any voting rights or rights to appoint directors attaching to the ownership interest.

This means that if a Chatime franchisee seeks to transfer their ownership interest, and the transaction would give the acquiring party control over voting rights or director appointments, it would be classified as a "Disposal" requiring adherence to Chatime's transfer procedures. These procedures, as outlined in Item 17, involve obtaining Chatime's prior written consent, which will not be unreasonably withheld, and fulfilling certain conditions. These conditions may include ensuring the transferee meets Chatime's standards, paying a transfer fee, and ensuring the transferee is not in default of any agreements.

This definition protects Chatime's interests by ensuring they maintain control over who has influence within their franchise system. By defining "Disposal" to include the acquisition of voting rights or director appointment powers, Chatime retains the ability to vet and approve any potential changes in leadership or control within a franchise location. Prospective franchisees should be aware of these transfer restrictions and the associated conditions, as they could impact their ability to sell or transfer their franchise in the future.