If Chatime assigns its rights, interests, obligations, or liabilities under the Franchise Agreement, what action are Franchisee Parties required to take upon Chatime's request?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Immediately upon request by Franchisor, Franchisee must take all necessary steps (including signing any document) to assign or otherwise transfer its rights under the documents granting the relevant Occupancy Right to Franchisee to Franchisor or its nominee.
- (2) If Franchisor does not require an assignment or other transfer of this Agreement, then this Agreement may, as determined by Franchisor, continue for the remainder of its term, in which case Franchisee must continue to perform all obligations under this Agreement other than in relation to any continued development.
- (3) If upon termination or expiration of this Agreement, Franchisor exercises its right to take an assignment of this Agreement pursuant to clause 17.2(1), then Franchisee will not be entitled to receive payment under this Agreement from the date of the assignment of this Agreement.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if Chatime requests, the franchisee must take all necessary steps, including signing any document, to assign or otherwise transfer its rights under the documents granting the relevant Occupancy Right to Chatime or its nominee. This requirement is triggered immediately upon Chatime's request.
This clause ensures that Chatime has the ability to control the premises from which the Chatime business operates, especially in situations where the occupancy rights are crucial for the continued operation of the franchise. By requiring the franchisee to assign these rights, Chatime can maintain control over the location, which is a significant asset for the franchise system.
However, if Chatime does not require an assignment or other transfer of the agreement, the agreement may continue for the remainder of its term, as determined by Chatime. In this case, the franchisee must continue to perform all obligations under the agreement, except those related to any continued development. If Chatime exercises its right to take an assignment of the agreement upon termination or expiration, the franchisee will not be entitled to receive payment under the agreement from the date of the assignment.