Within what timeframe must an interest in the Chatime development business be transferred to a third party after death or incapacity, according to the MDA?

According to Chatime's 2025 Franchise Disclosure Document, specifically section 11.7 of the Multi-Unit Development Agreement (MDA), if a person with an interest in the Chatime development business dies or becomes permanently incapacitated, that interest must be transferred to a third party. This transfer must occur within one year following the death or incapacity. The third party must also be approved by Chatime.

This requirement ensures that the Chatime business continues to be operated by a competent and approved individual, even in unforeseen circumstances. It protects Chatime's brand standards and the interests of other franchisees within the system. The one-year timeframe provides a reasonable period for the deceased's or incapacitated person's estate to handle the transfer while minimizing disruption to the business.

It's important to note that if an approved transfer is not completed within the one-year timeframe, Chatime retains the right to terminate the MDA. This underscores the importance of having a succession plan in place and communicating promptly with Chatime in the event of death or incapacity. Prospective franchisees should consider this provision carefully and discuss it with their legal and financial advisors to ensure they understand the implications for their estate planning.