What must a Chatime franchisee do before selling their ownership interest in the outlet?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) Franchisee must not sell or otherwise Dispose of its interest in the Franchise or The Franchised Business, 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 the Outlet
(Business) to Franchisor in accordance with clause 13.4.
- (2) If an offer made by Franchisee pursuant to clause 13.2(1) is not accepted, Franchisee may sell or otherwise Dispose of its interest in the Franchise or the Franchised Business subject to obtaining Franchisor's written consent which must not be unreasonably withheld if all of the conditions mentioned in clause 13.3 have been satisfied.
- (3) A request for Franchisor's consent under clause 13.2(2) must be made in writing.
- 13.3 Conditions to be Satisfied Before Assignment can be Approved
Franchisor must not unreasonably withhold its consent under clause 13.2(2) if the sale, assignment or other Disposal is of the whole of Franchisee's interest in the Franchise and the Franchised Business and each of the following conditions are satisfied:
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a franchisee is restricted from selling or disposing of their interest in the franchise or franchised business without Chatime's prior written consent. Before seeking this consent, the franchisee must first offer to sell their ownership interest in the outlet back to Chatime. This initial offer to Chatime is a mandatory step before any potential sale to a third party can be considered.
If Chatime declines the franchisee's offer to buy back the outlet, the franchisee may then proceed to seek Chatime's written consent to sell to another party. However, Chatime's consent will not be unreasonably withheld if certain conditions are met. These conditions typically ensure that the proposed sale aligns with Chatime's standards and protects the integrity of the franchise system.
Specifically, the sale, assignment, or disposal must be for the entirety of the franchisee's interest in the franchise and franchised business. Meeting these stipulations does not guarantee approval, but it prevents Chatime from unreasonably withholding consent, providing a pathway for the franchisee to sell their business if Chatime does not exercise its right of first refusal. The franchisee must make the request for consent in writing.