As defined in the Chatime FDD, what is included in 'Net Sales' for a Chatime store?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
Net Sales means all revenue from the sale of all products and sources, derived from, or originating from the relevant Chatime store. This includes online sales fulfilled from the location. Net sales
includes transactions, whether for cash, check, or credit, and regardless of collection in the case of check or credit, less any customer refunds, staff tips and/or sales taxes collected from customers and actually transmitted to the appropriate taxing authorities.
Net Sales information included in this Item 19 and the table below is obtained from store point-ofsale (POS) reports and other materials submitted by the retail locations and franchisee. Neither we, any of our affiliates nor an independent certified public accountant has independently audited or verified the information.
Source: Item 19 — Financial Performance Representations (FDD pages 52–53)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, 'Net Sales' for a Chatime store encompasses all revenue generated from the sale of products and services originating from the store. This definition explicitly includes online sales that are fulfilled by the specific Chatime location.
For a prospective Chatime franchisee, this definition is important because it clarifies what income is considered when evaluating the financial performance of a store. The inclusion of online sales in the 'Net Sales' figure indicates that Chatime recognizes and incorporates revenue from multiple sales channels when assessing a store's overall performance. This can be a significant factor in today's market, where online ordering and delivery services play a crucial role in the food and beverage industry.
However, the 'Net Sales' figure is calculated after deducting certain items. Specifically, customer refunds, staff tips, and sales taxes collected from customers that are then remitted to the appropriate taxing authorities are subtracted from the gross revenue. This means that the 'Net Sales' figure represents the actual revenue retained by the Chatime store after accounting for these deductions. Franchisees should be aware of these deductions when projecting their potential earnings and managing their store's finances.
The FDD also mentions that the Net Sales information provided is based on reports submitted by franchisees and retail locations, and that Chatime has not independently audited or verified this information. This highlights the importance of franchisees maintaining accurate records and carefully reviewing the financial data provided by Chatime.