Under what conditions will Chatime Franchisor not unreasonably withhold consent for a Disposal of Ownership Interests?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) Franchisee must not allow any of the following to occur without first obtaining Franchisor's written consent:
- (a) Any change in the composition of Franchisee's Owners, directors, and officers;
- (b) Any alteration to Franchisee's constitution;
- (c) Any Disposal of Ownership Interests in Franchisee; or
- (d) Any reduction or alteration of Franchisee's capital.
- (2) Franchisor must not withhold consent unreasonably if:
- (a) In the case of a Disposal of Ownership Interests, the requirements of clause 19.5 are met;
- (b) Franchisee executes and delivers to Franchisor a Release in substantially the form attached as Exhibit 1;
- (c) All new Owners must execute and deliver to Franchisor a signed personal guarantee in the form attached as Exhibit 3;
- (d) All new Owners executed and delivered to Franchisor a signed Confidentiality and Non-Competition Agr
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the franchisor will not unreasonably withhold consent for a disposal of ownership interests if certain requirements are met. Specifically, these conditions apply when a franchisee seeks to sell or transfer their ownership in the franchise. Chatime outlines particular criteria that must be satisfied before the franchisor approves the transfer.
First, the franchisee must meet the requirements outlined in clause 19.5. Second, the franchisee must provide a release to Chatime using the form attached as Exhibit 1. Third, all new owners must provide a signed personal guarantee using the form attached as Exhibit 3. Finally, all new owners must provide a signed Confidentiality and Non-Competition Agreement.
These conditions are typical in franchising, as franchisors want to ensure that any new owners are financially stable, experienced, and committed to upholding the brand's standards. The personal guarantees and confidentiality agreements protect Chatime's interests and confidential information. Franchisees should carefully review these requirements and be prepared to meet them if they plan to sell their franchise in the future.