Under what circumstances must a Chatime Developer offer to sell their operation to the Franchisor?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) Developer must not sell or otherwise Dispose of its interest in the Franchise or Developer's Operation, whether in whole or in part, voluntarily or involuntarily, by operation of law (including as a result of bankruptcy, divorce, death or disability, without Franchisor's prior written consent, and without first offering to sell the Ownership Interest of Outlets (Business) to Franchisor in accordance with clause 11.4.
- (2) If an offer made by Developer pursuant to clause 11.2(1) is not accepted, Developer may sell or otherwise Dispose of its interest in the Developer's Operation subject to obtaining Franchisor's written consent which must not be unreasonably withheld if all of the conditions mentioned in clause 11.3 have been satisfied.
- (3) A request for Franchisor's consent under clause 11.2(2) must be made in writing.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a Developer must first offer to sell their Ownership Interest of Outlets (Business) to Chatime before selling or disposing of their interest in the Franchise or Developer's Operation. This requirement applies whether the sale or disposal is in whole or in part, voluntary or involuntary, or by operation of law, including situations such as bankruptcy, divorce, death, or disability. This offer must be made before seeking Chatime's prior written consent for the transfer.
This clause ensures that Chatime has the first right of refusal if a Developer decides to exit the business. This is a common practice in franchising, allowing the franchisor to maintain control over the brand and network by choosing the next operator. If Chatime declines the offer, the Developer can then proceed to sell to a third party, subject to Chatime's approval.
However, the Developer can proceed to sell or dispose of its interest in the Developer's Operation if Chatime does not accept the offer. The Developer must obtain Chatime's written consent, which, according to the FDD, must not be unreasonably withheld if all the conditions mentioned in clause 11.3 have been satisfied.