Under what conditions can a Chatime franchisee transfer their franchise agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
petition 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. | ||
|---|---|---|
| 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. |
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, a franchisee can transfer their franchise agreement, but Chatime has the right of first refusal to acquire the franchisee's business on the same terms offered by a third party. This applies to both the franchise and any ownership interest.
Chatime may impose several conditions on approving a proposed transfer. These include ensuring the transferee meets Chatime's standards, payment of a Transfer Fee and any legal/administrative costs, and ensuring the franchisee is not in default of any agreements with Chatime or its affiliates. The transferee must also sign Chatime's current form of MDA (Master Development Agreement) or execute an assignment in the required form, provide a guarantee and indemnity in Chatime's favor, and have their owners sign personal guarantees and confidentiality/non-competition agreements.
Additionally, the franchisee must provide Chatime with the purchase agreement and any related transfer documents. Chatime must also be satisfied that the transfer will not adversely affect the Chatime system or network. These transfer provisions are subject to state law, which may provide additional protections or restrictions for franchisees.
In the event of the death or permanent incapacity of a person with interest in the franchise, the interest must be transferred to a Chatime-approved third party within one year. If an approved transfer does not occur within this timeframe, Chatime has the right to terminate the agreement.