To what extent are transfer fees collectable by Chatime?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (67) Transfer Fee means a fee in the amount of Ten Thousand Dollars ($10,000).
Franchisor must not unreasonably withhold its consent under clause 11.2(2) if the sale, assignment, or other Disposal is of the whole of Developer's interest in the Developer's Operation and each of the following conditions are satisfied:
(1) Developer establishes to Franchisor's reasonable satisfaction that the proposed assignee (and its directors and Owners if the assignee is a business entity):
- (a) Possesses the financial resources necessary to conduct and operate Developer's Operation as a Developer and to service any borrowings it makes in order to acquire Developer's Operation;
- (b) Is a reputable and responsible and has the business experience and capabilities necessary to operate Developer's Operation successfully; and
- (c) Otherwise meets Franchisor's criteria for the selection of new Chatime developers;
(2) Developer pays to Franchisor the Transfer Fee;
(3) Developer, both when seeking consent to the assignment and when the assignment is to occur, is not in default under this Agreement or any Collateral Agreement;
(4) At the option of Franchisor:
(a) The assignee executes Franchisor's then-standard form development business agreement for the balance remaining of the Initial Term (including any existing option for a New Term); or
(b) Developer and the assignee execute an assignment of Developer's rights and obligations under this Agreement to the assignee in a form required by Franchisor,
and Developer and the assignee execute any other documents then used by Franchisor for the grant of Chatime development business;
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a transfer fee of $10,000 is required when a developer seeks to transfer their interest in the Development Operation. Chatime outlines specific conditions that must be met before the transfer can proceed.
Chatime states that it will not unreasonably withhold consent for the transfer, provided that the sale, assignment, or disposal involves the entirety of the developer's interest. Several conditions must be satisfied, including the proposed assignee demonstrating the necessary financial resources, a reputable business record, and meeting Chatime's criteria for new developers. The developer must not be in default under any agreements and must pay Chatime the $10,000 transfer fee.
Chatime also has the option to require the assignee to execute the then-standard form development business agreement or have the developer and assignee execute an assignment of rights and obligations under the existing agreement. These stipulations ensure that Chatime maintains control over who enters into agreements and that the brand's standards are upheld even when a transfer occurs. This is a fairly standard practice in franchising, as franchisors want to ensure any new franchisee or developer is well-qualified and committed to the brand.