Is the 'Development Fee' for Chatime recurring?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (18) Development Fee means a non-recurring development fee in the amount specified in Section 6 of Schedule 1.
Developer must pay the Development Fee to Franchisor in accordance with the payment schedule set out in Section 6 of Schedule 1. You must pay Development Fee in one lump sum when you sign this Multi-Unit Development Agreement. The Development Fee replaces, and serves as a full credit against, the Initial Franchise Fee for each Outlet you agree to open (including but not limited to your first Outlet). The Development fee is fully earned by us upon our receipt, and it is not refundable any circumstances, regardless of how many Outlets you actually open.
Where Developer exercises its option to enter into a new development business agreement for the New Term in accordance with clause 2.7, Developer must pay to Franchisor the Renewal Development Fee in accordance with the then-current form of Multi-Unit Development Agreement.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the Development Fee is generally a one-time, non-recurring fee. Specifically, the FDD states that the Development Fee is a "non-recurring development fee". This fee is paid in a lump sum upon signing the Multi-Unit Development Agreement and serves as a credit against the Initial Franchise Fee for each Chatime outlet the developer agrees to open. Once paid, this fee is considered fully earned by Chatime and is non-refundable, regardless of the number of outlets eventually opened.
However, the Chatime FDD also mentions a 'Renewal Development Fee'. If a developer chooses to enter into a new development business agreement for a new term, they must pay this Renewal Development Fee. The amount and terms of this fee would be based on the then-current Multi-Unit Development Agreement. Therefore, while the initial Development Fee is non-recurring, a similar fee is required if the development agreement is renewed for another term.
In summary, while the initial Development Fee for Chatime is a one-time payment, franchisees should be aware that a Renewal Development Fee will be required if they choose to extend their development agreement for a new term. This Renewal Development Fee would be subject to the terms outlined in the then-current Multi-Unit Development Agreement. Franchisees should carefully consider the implications of these fees when evaluating the overall cost and commitment associated with a Chatime franchise development.