Does the definition of 'Disposal' for a Chatime franchise include otherwise acquiring legal or equitable rights against the registered holder of the ownership interest which have the effect of placing the person in the same position as if the person had acquired a legal or equitable interest in the ownership interest?

According to Chatime's 2025 Franchise Disclosure Document, the definition of "Disposal" regarding ownership interest includes acquiring legal or equitable rights against the registered holder. Specifically, it addresses scenarios where someone gains rights that effectively place them in the same position as if they had directly acquired a legal or equitable interest in the ownership.

This definition is important for prospective Chatime franchisees because it clarifies what actions constitute a transfer of ownership. Even if a franchisee doesn't directly sell or assign their ownership, granting certain rights to another party can be considered a "Disposal" and therefore a transfer. This could trigger the franchisor's rights and require their approval.

Chatime outlines several scenarios that constitute disposal, including acquiring rights of pre-emption, first refusal, or control over the ownership interest. It also includes acquiring rights of control over the exercise of any voting rights or rights to appoint directors attaching to the ownership interest. This broad definition ensures that any significant shift in control or benefit related to the ownership interest is subject to the transfer provisions of the franchise agreement.

Therefore, Chatime franchisees must be aware of these restrictions and seek franchisor approval before entering into any agreement that could be interpreted as a disposal of ownership interest, even if it doesn't involve a direct sale or assignment. Failing to do so could result in a breach of the franchise agreement.