Who determines the reasonable Temporary Management Fee for Chatime?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| Uniforms for First | $500 to $1,500 | $500 to $1,500 | $500 to $1,500 |
|---|---|---|---|
| Location | |||
| Initial Training for First | $5,000 | $5,000 | $5,000 |
| 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. |
| Interest Rate | The lesser of 1.5% per month or the highest rate allowed by law | As invoiced | If you fail to pay us any amount when due, you will pay interest on that amount at the Interest Rate from the time the amount should have been paid until it is paid. Interest accrues daily and may be capitalized by us. |
| Alternate | Costs incurred | As invoiced | You will reimburse us for our costs to test |
| Supplier Testing | a proposed alternate supplier regardless of | ||
| Fee | whether such supplier is approved. | ||
| Temporary Management Fee | Commercially reasonable fee not less than $30 per hour plus costs of travelling, accommodation, meals, and other expenses for operating and managing the Store | As invoiced | If you cease to conduct operations or abandon your franchise business, we or our nominee may, but are not required to, enter your business premises and operate and manage your franchise business until you comply with our direction or notice requiring you to recommence operations. You will pay us a reasonable Temporary Management Fee we determine and our associated expenses including, without limitation, costs for employee wages and entitlements, travel, accommodations, and meals. |
| Taxes | Amount imposed by your state, local, and federal governments | As incurred | You will pay all applicable taxes. If any laws are changed, new laws are introduced or courts, or any relevant authority interprets laws differently so as to require us to pay a tax, duty, excise, or levy (impost) on amounts we receive from you (other than income tax) or on goods or services we supply, you will pay us an additional amount so that our net yield is unchanged. |
| Additional Marketing Assistance Fee | Current rates are $250 to $500 per person per day | As invoiced | If you request any additional marketing assistance from us that is not within the scope of assistance provided for by the Brand Marketing Fee, you will pay us any additional fees we charge for such additional marketing assistance. |
Source: Item 6 — Other Fees (FDD pages 13–17)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime determines the reasonable Temporary Management Fee. If a franchisee ceases operations or abandons their franchise, Chatime or its nominee has the option to step in and manage the business. In this case, the franchisee is responsible for paying a Temporary Management Fee that Chatime deems reasonable, in addition to covering associated expenses like employee wages, travel, accommodations, and meals. The minimum hourly rate for the temporary management fee is $30 per hour, plus costs.
This fee is invoiced to the franchisee. This means that Chatime has the authority to determine the fee amount, as long as it is deemed commercially reasonable and not less than $30 per hour, and the franchisee is obligated to pay it. This arrangement protects Chatime in situations where a franchisee is not operating the business, ensuring that Chatime can maintain operations and recover costs.
Prospective franchisees should consider this potential expense and understand the circumstances under which it could be applied. It is important to clarify with Chatime what factors they consider when determining the "reasonable" Temporary Management Fee beyond the minimum hourly rate and associated costs. Understanding this process can help franchisees anticipate potential costs and avoid disputes.