What happens if a Chatime developer is in default under the Development Agreement when seeking consent to the assignment?

According to Chatime's 2025 Franchise Disclosure Document, a developer's default status significantly impacts their ability to assign their development agreement. Specifically, Chatime will not grant consent for the assignment if the developer is in default at the time they are seeking consent or when the assignment is scheduled to occur.

This condition protects Chatime by ensuring that developers meet their contractual obligations before transferring their rights to another party. Defaulting developers cannot simply transfer their problems and obligations to a new entity without first rectifying their non-compliance. This requirement maintains the integrity of the Chatime franchise system and ensures that new developers are set up for success without inheriting unresolved issues.

For a prospective Chatime developer, this underscores the importance of staying in compliance with all aspects of the Development Agreement. Failure to do so can not only jeopardize their current operations but also their future ability to sell or transfer their business interests. Developers should maintain open communication with Chatime to address any potential issues promptly and avoid default status, especially if they are considering an assignment.