factual

What form of agreement is the transferee required to sign during a Chatime franchise transfer?

Chatime Franchise · 2025 FDD

Answer from 2025 FDD Document

k. "Transfer" by FA: §1.1(16); §13 Defined as a "Disposal." Disposal includes any
franchisee voluntary, involuntary, direct, or indirect sale,
–
defined
assignment, pledge, bequeath, trade, or transfer.
In
relation
to
a
business
entity,
Disposal
includes
entering
into a transaction in relation to an ownership interest
that
results
in
a
person
other
than
the
registered
holderof the ownership interest (i) acquiring any legal
or equitable
interest in the ownership interest
including an
equitable
interest arising
from a
declaration
of
trust, an agreement for sale and purchase
or an option agreement or an agreement creating a
charge or other encumbrance in the ownership interest,
(ii) acquiring any
right
to
directly
or
indirectly
receive
any
dividends payable
from
the
ownership
interest,
(iii)
acquiring
any rights
of
pre-
emption,
first
refusal,
or
like
control
over the ownership interest, (iv) acquiring
any rights of control over the exercise of any voting
rights or rights to
appoint
directors
attaching
to
the
ownership
interest, or (v) 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.
MDA: Same
§1.1(24) as above.
l. Franchisor approval FA: §13.2 You may only transfer a direct or indirect interest in your
of Franchise Agreement with our prior written consent,
transfer
by
franchisee
which will not be unreasonably withheld.
MDA: §11.2 You may only transfer a direct or indirect interest in your
MDA
with our prior written consent, which will not be
unreasonably withheld.
m. Conditions of FA: §13.3 We may impose any of the following conditions on our
franchisor approval of your proposed transfer: (i) you establish to
approval
of
transfer our
reasonable
satisfaction
that
the
transferee
meets
our
standards, (ii) you pay us a Transfer Fee and any other
legal and administrative costs we incur related to the
transfer, (iii) you are not in default of any agreement
between us or our affiliates, (iv) the transferee signs
our then-current form of Franchise Agreement, or you
and the transferee execute an assignment in the form
we require, (v) the transferee provide a guarantee and
indemnity in our favor in a form we require, (vi) the
transferee successfully completes our training
programs, (vi) the transferee's owners sign a personal
guaranty, (vii) the transferee's owners and managers
sign a confidentiality and non-competition agreement,
(viii) you provide us with the purchase agreement

| | | between you and transferee and any other documents related to the transfer, and (ix) you establish to our reasonable satisfaction that the transfer would not lead to or have any adverse effect on the System or the Chatime network. This provision is subject to state law.

Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 43–52)

What This Means (2025 FDD)

According to Chatime's 2025 Franchise Disclosure Document, a transferee may be required to sign Chatime's then-current form of Franchise Agreement (FA) or the then-current form of Master Development Agreement (MDA) during a transfer. Alternatively, the transferor and transferee may execute an assignment in a form required by Chatime. The specific agreement depends on whether the franchise being transferred is governed by a Franchise Agreement or a Master Development Agreement.

In addition to signing the relevant agreement or assignment, Chatime may require the transferee to meet certain conditions. These conditions include demonstrating that the transferee meets Chatime's standards, paying a transfer fee and any associated legal and administrative costs, ensuring that the transferor is not in default of any agreements with Chatime or its affiliates, providing a guarantee and indemnity in Chatime's favor, and ensuring the transferee's owners sign a personal guaranty and a confidentiality and non-competition agreement.

These requirements ensure that Chatime maintains control over who becomes a franchisee and that the new franchisee is committed to upholding the brand's standards and protecting its interests. Prospective franchisees should carefully review the conditions of transfer and understand the financial and legal obligations involved. They should also be prepared to meet Chatime's standards and provide the necessary guarantees and assurances.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.
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