Can the Chatime franchisor vary the terms of the Offer Notice in their Acceptance Notice?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (4) The Acceptance Notice may contain terms which vary the terms of the Offer Notice so long as the terms upon which Franchisor agrees to buy the Business are not commercially less favorable to Franchisee than those contained in the Offer Notice. For example, if the consideration, terms, and/or conditions offered by a third party are such that Franchisor is not reasonably able to furnish the same types of consideration, terms, and/or conditions, then Franchisor may purchase the interests proposed to be transferred for the reasonable equivalent in cash.
- (5) If Franchisee receives the Acceptance Notice during the Offer Period Franchisee must sell
and Franchisor must purchase the Business upon the terms and conditions contained in the Offer Notice as may be varied by the Acceptance Notice.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime may vary the terms of the Offer Notice in its Acceptance Notice, provided that the terms upon which Chatime agrees to buy the business are not commercially less favorable to the franchisee than those in the Offer Notice. This means that while Chatime can propose different terms, the overall deal must be at least as beneficial to the franchisee as the original offer.
For instance, if a third party offers specific consideration, terms, and conditions that Chatime cannot reasonably match, Chatime can purchase the interests proposed for transfer by offering a reasonable cash equivalent. This ensures Chatime has the flexibility to adjust the terms while maintaining a fair deal for the franchisee.
If the franchisee receives the Acceptance Notice during the Offer Period, they are obligated to sell, and Chatime is obligated to purchase the business under the terms and conditions of the Offer Notice, as potentially modified by the Acceptance Notice. This clause ensures that once an agreement is reached, both parties are bound to the transaction. If Chatime does not accept the offer within the Offer Period, the franchisee is free to sell to a third party under certain conditions.