Does the definition of 'Disposal' for a Chatime franchise include a pledge of the franchise?

According to Chatime's 2025 Franchise Disclosure Document, the definition of "Disposal" includes a pledge of the franchise. The FDD specifies that a "Transfer" is defined as a "Disposal". Disposal encompasses any voluntary, involuntary, direct, or indirect sale, assignment, pledge, bequeath, trade, or transfer.

This definition is important for prospective Chatime franchisees because it clarifies that any action considered a "Disposal," including a pledge, is subject to the transfer provisions outlined in the Franchise Agreement. This means Chatime's consent may be required before a franchisee can pledge their franchise.

Chatime outlines specific conditions for franchisor approval of a transfer. These conditions include ensuring the transferee meets Chatime's standards, payment of a Transfer Fee and associated costs, ensuring the franchisee is not in default, requiring the transferee to sign the current Franchise Agreement, and providing a guarantee and indemnity. The transferee must also complete training programs, and their owners must sign personal guarantees and confidentiality agreements. These conditions give Chatime significant control over who can take over a franchise, even in cases of a pledge.