Are the transferee's owners required to sign a personal guaranty 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 transferee's owners may be required to sign a personal guaranty as a condition of franchise transfer approval. Chatime has the right to request that the owners of the business acquiring the Chatime franchise sign a personal guaranty.
This means that if you are selling your Chatime franchise, the individuals taking over your business might have to personally guarantee the financial obligations of the franchise agreement. This is a fairly standard practice in franchising, as it provides the franchisor with an additional layer of security that the new franchisee will meet its financial responsibilities.
It is important for prospective franchisees to understand that Chatime can impose this condition, and potential buyers should be prepared to sign a personal guaranty if required. This requirement is part of Chatime's broader set of conditions for approving a transfer, which also includes ensuring the transferee meets Chatime's standards, payment of a transfer fee, and the transferee signing Chatime's current franchise agreement.