Can Chesters assign the franchise agreement to a third party?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
Assignment.
We may change our ownership or form and/or assign this Agreement to a third party without restriction.
If we assign this Agreement, we will have no liability for events or performance arising after the effective date of the assignment.
You may not transfer this Agreement without our prior written consent, which we may grant or withhold as we deem best.
If your controlling ownership interest or actual management control is transferred, or if you sell substantially all of your assets, that will be considered a transfer of this Agreement for purposes of our approval rights.
If such a transfer occurs without our approval, we may terminate this Agreement, effective immediately upon delivery of notice.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, Chesters has the right to assign the franchise agreement to a third party without any restrictions. If Chesters does assign the agreement, it will not be liable for any events or performance that occur after the assignment's effective date. This means that a new franchisee would be dealing with a potentially unknown entity after the assignment.
However, the franchisee's ability to transfer the agreement is limited. The franchisee cannot transfer the agreement without Chesters' prior written consent, which Chesters can grant or withhold at its discretion. A transfer is considered to occur if the franchisee's controlling ownership interest or actual management control is transferred, or if the franchisee sells substantially all of their assets.
If a transfer occurs without Chesters' approval, Chesters has the right to terminate the agreement immediately upon delivery of notice. This clause highlights the importance of obtaining franchisor approval before making any significant changes to the ownership or control of the franchise. This is a fairly standard clause in franchise agreements, as franchisors want to ensure that any new owners meet their standards and are capable of running the business effectively.