Under what circumstances is the Chatime Developer not required to ensure that leases include a provision permitting assignment or transfer to the Franchisor?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
(3) Unless prohibited by law or commercially impractical (which must be demonstrated to Franchisor) Developer must ensure that all leases, subleases, licenses, or other documents granting an occupancy right to Developer, include a provision which permits Developer's rights under such leases, subleases, licenses, or other documents to be assigned or otherwise transferred to Franchisor or its nominee, at Franchisor's option, on termination or expiration of this Agreement.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a Developer is generally required to ensure that all leases, subleases, licenses, or other documents granting an occupancy right include a provision that allows the rights to be assigned or transferred to Chatime or its nominee if the agreement is terminated or expires.
However, this requirement is waived if it is prohibited by law or commercially impractical. The Developer bears the responsibility of demonstrating to Chatime that including such a provision in the lease is either legally prohibited or not commercially feasible.
This condition protects Chatime's interests by ensuring they can take over the premises if a Developer's agreement ends. A prospective Chatime Developer should understand the local laws and commercial real estate practices in their area to assess the likelihood of encountering such prohibitions or impracticalities. They should also be prepared to document and justify any claims of legal prohibition or commercial impracticality to Chatime.