What does the Chatime Audit Fee cover?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| Fee(1) Type of | Amount | Due Date | Remarks |
|---|---|---|---|
| Audit Fee | Cost of audit | As invoiced | Payable if (i) we find that you have understated any amount you owe to us by more than 2%, or (ii) you fail to furnish reports, supporting records, other information or financial statements as required on a timely basis and we believe an audit is necessary. The Audit Fee includes accountants' fees, legal fees, and associated travel and accommodation expenses for our employees. |
Source: Item 6 — Other Fees (FDD pages 13–17)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the Audit Fee covers specific expenses incurred by Chatime during an audit of a franchisee's business. This fee is only payable if Chatime discovers that the franchisee has understated amounts owed to them by more than 2%, or if the franchisee fails to provide required reports, records, information, or financial statements in a timely manner, prompting Chatime to deem an audit necessary.
The Audit Fee is designed to reimburse Chatime for the direct costs associated with conducting the audit. Specifically, it includes accountants' fees, legal fees, and the associated travel and accommodation expenses for Chatime's employees involved in the audit. This means that if a Chatime franchisee is found to have underreported their financial obligations or has failed to provide necessary documentation, they will be responsible for covering these audit-related expenses.
This policy is fairly standard in franchising, as franchisors need to ensure accurate reporting of financial information to calculate royalties and other fees correctly. The threshold of understating by more than 2% provides some leeway for minor discrepancies, but it's crucial for Chatime franchisees to maintain accurate records and submit them on time to avoid triggering an audit and incurring these additional costs. Franchisees should ensure they understand the reporting requirements and maintain meticulous records to avoid any potential issues.