Does Chatime require approval of the third party to whom the interest is transferred after death or incapacity?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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. | ||
|---|---|---|
| MDA: §11.3 | We may impose any of the following conditions on our approval of your proposed transfer: (i) you establish to 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 MDA, 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'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. | |
| n. Franchisor's right of first refusal to acquire franchisee's business | §13.4 | You may not sell your franchise or otherwise transfer any ownership interest without first offering to sell the ownership interest to us on the same terms and conditions offered by a third party. |
| MDA: §11.4 | You may not sell your MDA or otherwise transfer any ownership interest without first offering to sell the ownership interest to us on the same terms and conditions offered by a third party. | |
| o. Franchisor's option to purchase franchisee's | Not applicable | Not applicable. |
| business | Not | Not |
| applicable | applicable | |
| p. Death or disability of franchisee | Section 13.7 | Upon the death or permanent incapacity of any person with an interest in the franchisee, such interest must be transferred to a third party approved by us within one year following the death or incapacity. We have the right to terminate the agreement if an approved transfer is not completed within the designated period of time. |
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, if a franchisee or someone with interest in the franchise experiences death or permanent incapacity, the interest must be transferred to a third party. Chatime must approve this third party.
Chatime maintains the right to terminate the franchise agreement if the transfer to an approved party is not completed within one year of the death or incapacity. This condition ensures that Chatime retains control over who operates its franchises, even in unforeseen circumstances.
This requirement is a fairly standard practice in franchising, allowing Chatime to maintain its brand standards and operational consistency by ensuring that any new owner meets their criteria. Prospective franchisees should consider this when planning for the future of their business and discuss potential succession plans with Chatime.