Does the Chatime FDD indicate that there are restrictions on a Developer's ability to deal with the Franchise and Developer's Operation?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
11 Transfer and Other Dealings by Developer
11.1 Acknowledgements by Developer
Developer acknowledges that:
- (1) The Franchise has been granted to Developer following a consideration by Franchisor of the character, business experience, and capability and financial capacity of Developer Parties; and
- (2) Because of this there are important restrictions in this clause 11 on Developer's ability to deal with the Franchise and Developer's Operation.
11.2 Prohibition Against Transfer by Developer
- (1) Developer must not sell or otherwise Dispose of its interest in the Franchise or Developer's Operation, whether in whole or in part, voluntarily or involuntarily, by operation of law (including as a result of bankruptcy, divorce, death or disability, without Franchisor's prior written consent, and without first offering to sell the Ownership Interest of Outlets (Business) to Franchisor in accordance with clause 11.4.
- (2) If an offer made by Developer pursuant to clause 11.2(1) is not accepted, Developer may sell or otherwise Dispose of its interest in the Developer's Operation subject to obtaining Franchisor's written consent which must not be unreasonably withheld if all of the conditions mentioned in clause 11.3 have been satisfied.
- (3) A request for Franchisor's consent under clause 11.2(2) must be made in writing.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, there are indeed restrictions on a Developer's ability to deal with the Franchise and Developer's Operation. Specifically, the FDD highlights that the franchise is granted to the Developer based on an evaluation of their character, business experience, capability, and financial capacity.
The Chatime FDD states that the Developer cannot sell or otherwise dispose of their interest in the Franchise or Developer's Operation, whether in whole or in part, voluntarily or involuntarily, or by operation of law, without Chatime's prior written consent. Before seeking consent, the Developer must first offer to sell the Ownership Interest of Outlets to Chatime.
If Chatime does not accept the offer, the Developer may proceed with a sale to a third party, but only after obtaining Chatime's written consent. Chatime, however, cannot unreasonably withhold consent if certain conditions are met, such as the sale, assignment, or disposal being for the entirety of the Developer's interest in the Developer's Operation.