What constitutes a 'transfer' by a Chesters franchisee that requires franchisor approval?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise or other agreement | Summary | |
|---|---|---|---|
| k. | "Transfer" by franchisee – defined | 18 of Agreement | Includes transfer of Agreement, your controlling ownership interest, and your actual management control. |
| l. | Franchisor approval of transfer by franchisee | 18 of Agreement | You have no right to transfer without our prior written consent, which we have the right to grant or withhold as we deem best. |
| m. | Conditions for franchisor approval of transfer | 18 of Agreement | The Agreement does not specify any transfer conditions you must satisfy; we have the right to grant or withhold approval of a proposed transfer as we deem best. |
| n. | Franchisor's right of first refusal to acquire franchisee's business | Not Applicable | The Agreement does not contain this right. |
| 0. | Franchisor's option to purchase franchisee's business | Not Applicable | The Agreement does not contain this right. |
| p. | Death or disability of franchisee | Not Applicable | The Agreement does not address this issue. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 35–38)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, a 'transfer' by a franchisee requiring franchisor approval includes the transfer of the Franchise Agreement itself, the transfer of the franchisee's controlling ownership interest, and the transfer of the franchisee's actual management control.
This means that if a Chesters franchisee wants to sell their franchise to someone else, or if they want to give up control of the business, they need to get Chesters's approval first. This is a common provision in franchise agreements, as franchisors want to make sure that any new owners or managers are qualified to run the business and will maintain the brand's standards.
Chesters retains the right to grant or withhold approval of a proposed transfer as they deem best. The agreement does not specify any transfer conditions that the franchisee must satisfy. This gives Chesters significant discretion over who can become a franchisee or manager, and it is a point to consider when evaluating the franchise opportunity.
Unlike some franchise agreements, the Chesters agreement does not contain a right of first refusal or an option to purchase the franchisee's business. Also, the agreement does not address issues related to the death or disability of the franchisee.