Does Chesters have any restrictions on assigning the Franchise Agreement?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise or other agreement | Summary | |
|---|---|---|---|
| j. | Assignment of contract by franchisor | 18 of Agreement | No restriction on our right to assign; we have the right to assign without your approval. |
| 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. |
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, the franchisor has no restrictions on assigning the franchise agreement. However, franchisees face significant restrictions.
Specifically, Chesters retains the right to assign the agreement to another party without needing the franchisee's approval. This gives Chesters considerable flexibility in structuring its business and potentially transferring its rights and obligations to another entity.
For a franchisee, the ability to transfer the franchise agreement is not guaranteed. The FDD states that a franchisee cannot transfer the agreement without prior written consent from Chesters. Chesters has the right to grant or withhold this approval as it deems best. This means that even if a franchisee finds a qualified buyer, Chesters can still deny the transfer for any reason.
The agreement does not specify any transfer conditions that a franchisee must satisfy, further emphasizing Chesters's discretion in approving or denying a transfer. This lack of specific conditions creates uncertainty for franchisees looking to sell their business, as the approval process is subjective and controlled by Chesters.