Does Chesters have any restrictions on assigning the franchise contract?
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. |
| 1. | 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, Chesters places significant restrictions on a franchisee's ability to transfer the franchise agreement. The FDD indicates that a franchisee has no right to transfer the agreement without prior written consent from Chesters. Chesters retains the right to grant or withhold this approval as it deems best.
This means that if a franchisee wishes to sell their Chesters franchise, or transfer controlling ownership or management control, they must first obtain Chesters's approval. Chesters has broad discretion in deciding whether to approve the transfer. The agreement does not specify any particular conditions that a franchisee must meet for a transfer to be approved.
This lack of specified conditions gives Chesters considerable power over franchise transfers. A prospective franchisee should carefully consider this when evaluating the Chesters franchise opportunity. It is advisable to discuss with Chesters what factors they consider when evaluating a potential transfer, to better understand the likelihood of being able to sell the franchise in the future. This is a fairly typical arrangement in franchising, as franchisors want to ensure that any new franchisee meets their standards and is a good fit for the system.
In contrast, Chesters faces no such restrictions on their ability to assign the franchise agreement. The FDD states that there is no restriction on Chesters's right to assign the agreement, and they can do so without the franchisee's approval. This means Chesters could sell the franchise system to another company without needing the franchisees' consent.