Does the estimated initial investment for a Chatime franchise in Item 7 cover more than the initial three-month phase of operation?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
Item 7: Estimated Initial Investment
YOUR ESTIMATED INITIAL INVESTMENT
TABLE A: Franchise Agreement Estimated Initial Investment
The figures below assume the opening of one Chatime Store by you under a Franchise Agreement and operation of the Chatime Store for an initial phase of three months, unless otherwise indicated:
- (11) Additional Funds Three Months.
This is an estimate of the funds needed for business (not personal) expenses during the first three months of operation of your Chatime Store and includes the estimated costs of sales and operating expenses incurred during the initial month of operation (such as payroll, utilities, taxes and, other expenses).
This estimate excludes owners' salaries or draws and non-Chatime Store management expenses.
Your actual costs may be higher.
Cash flow from your operations may not be adequate to cover operating and other costs during the initial phase of business.
Your costs will depend on factors such as how well you follow our recommended method and procedures, your management, marketing, and general business skills, local economic conditions, the local market for your products and services, competition, local cost factors, and your Chatime Store's sales levels.
There is no guarantee that the amounts specified are adequate or that additional investment by you will not be necessary during the first three months of initial operation or afterwards.
| Estimated Amount | Method of | |
|---|---|---|
| Type of Expenditure | ||
| Initial Franchise Fee(1) | $54,900 | Lump sum |
| Initial Training, Opening | $5,000 | As arranged |
| Rent(3) | $6,000 to $33,000 | As arranged |
| Lease Security Deposit (3) | $4,000 to $22,000 | As arranged |
Source: Item 7 — Estimated Initial Investment (FDD pages 17–22)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the estimated initial investment detailed in Item 7 is designed to cover the costs of opening and operating a Chatime store for the initial three-month phase. The figures provided in the document assume operation for this initial period, unless otherwise specified. This includes expenses necessary for the first three months of operation.
Specifically, the initial investment includes estimates for various expenditures, such as the initial franchise fee of $54,900, initial training and related personnel costs of $5,000, rent ranging from $6,000 to $33,000, and lease security deposits between $4,000 and $22,000. It also accounts for leasehold improvements, equipment, initial local marketing, licenses, permits, utility deposits, and opening inventory and supplies. Additionally, the initial investment includes an estimate of funds needed for business expenses during the first three months of operation, covering costs like payroll, utilities, and taxes.
However, the FDD also notes that these are estimates, and actual costs may vary depending on factors such as management skills, local economic conditions, and sales levels. The document explicitly states that there is no guarantee the specified amounts will be adequate and that additional investment may be necessary during or after the initial three-month period. The estimate excludes owner's salaries or draws and non-Chatime Store management expenses. Therefore, while the initial investment aims to cover the first three months, franchisees should be prepared for potential additional costs.