Are the transferee's owners and managers required to sign a confidentiality and non-competition agreement during a Chatime franchise transfer?
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. | ||
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| 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. |
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, the franchisor may require the transferee's owners and managers to sign a confidentiality and non-competition agreement as a condition of approving a franchise transfer. This requirement is not mandatory in every transfer scenario, but Chatime reserves the right to impose it.
For a prospective Chatime franchisee looking to sell their business, this means that the potential buyer's owners and managers might need to agree to maintain the confidentiality of Chatime's business practices and not compete with the franchise after the transfer. This is a fairly standard practice in franchising, as it protects the brand's proprietary information and market position.
It is important to note that this condition is just one of several that Chatime may impose. Others include ensuring the transferee meets Chatime's standards, payment of a transfer fee, and the transferee signing Chatime's current Franchise Agreement. A prospective franchisee should discuss all potential transfer conditions with Chatime to fully understand the requirements for selling their franchise.