Under what conditions can Chatime impose requirements on the approval of a 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, Chatime can impose specific conditions when a franchisee proposes to transfer their franchise. These conditions are outlined to ensure that the transfer meets Chatime's standards and does not negatively impact the Chatime system.
Chatime may require that the prospective transferee meets Chatime's standards. The transferring franchisee must pay a transfer fee, as well as any legal and administrative costs Chatime incurs during the transfer process. Chatime also stipulates that the franchisee must not be in default of any agreements with Chatime or its affiliates at the time of transfer. The transferee must sign Chatime's current franchise agreement or an assignment in a form required by Chatime, and provide a guarantee and indemnity in Chatime's favor. The transferee's owners and managers may also be required to sign personal guarantees, confidentiality, and non-competition agreements.
Furthermore, Chatime requires the franchisee to provide the purchase agreement and any related documents between the franchisee and the transferee. Finally, Chatime must be satisfied that the transfer will not adversely affect the Chatime system or network. It is important to note that these provisions are subject to state law, which may impose additional regulations or limitations on franchise transfers.