What expenses are included in the management fee that a Chatime franchisee must pay to the franchisor?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee must pay the Brand Marketing Fee to Franchisor on the tenth day of each Month. The Brand Marketing Fee will be determined based on the Gross Sales of the Outlet for the previous Month.
7.3 Use of the Brand Marketing Fee
- (1) Franchisor may, in its sole discretion, use the Brand Marketing Fee to pay the Costs of:
- (a) Developing and conducting local, regional or national advertising and promotional campaigns, including advertising in international or regional publications;
- (b) Engaging advertising agencies and marketing and research consultants;
- (c) Providing Franchisee with samples of brochures and marketing materials used by Franchisor or its Affiliates, for amendment and use, subject to clause 7.3(4), by Franchisee in the Territory;
- (d) Coordinating and administering the activities set out in clauses 7.3(1)(a) to 7.3(1)(c), including reasonable overhead and administrative Costs (including employee costs), the Cost of materials and printing Costs; and
- (e) Any other marketing activity for the purpose of developing the Chatime brand internationally, regionally, or in the Territory.
- (2) In applying the Brand Marketing Fee for the purposes set out above, Franchisor may combine the Brand Marketing Fee with other brand marketing fees provided by other franchisees. There is no assurance that any portion of your Brand Marketing Fee or the Brand Marketing Fund will be allocated or spent for advertising in your Territory or region of the country. The monies paid to the Brand Marketing Fund do not constitute a trust fund.
- (3) If Franchisee requests any additional marketing assistance from Franchisor that, in the opinion of Franchisor, is not within the scope of assistance provided for by the Brand Marketing Fee, then Franchisee must pay to Franchisor upon invoice by Franchisor any additional fees and charges levied by Franchisor for such additional marketing assistance.
- (4) Franchisee must not use any marketing or promotional materials unless that marketing or promotional material has been first approved in writing by Franchisor.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
Based on the 2025 Chatime Franchise Disclosure Document, there is no mention of a "management fee." However, the document does mention a "Brand Marketing Fee" in section 7.2. The Brand Marketing Fee is paid to the Franchisor on the tenth day of each month and is determined based on the Gross Sales of the Outlet for the previous month.
According to section 7.3, the Brand Marketing Fee may be used to cover the costs of developing and conducting advertising and promotional campaigns at the local, regional, or national level, including advertising in international or regional publications. It can also be used to engage advertising agencies, marketing, and research consultants. Additionally, the fee may cover the provision of brochures and marketing materials for franchisees to use, as well as the coordination and administration of these marketing activities, including overhead, administrative costs, employee costs, materials, and printing costs.
Furthermore, the Brand Marketing Fee can be used for any other marketing activity aimed at developing the Chatime brand internationally, regionally, or within the franchisee's territory. The franchisor has the discretion to combine these fees with those from other franchisees, and there is no guarantee that the fees will be specifically allocated to advertising in the franchisee's particular territory or region. It's important to note that the Brand Marketing Fund is not a trust fund. If a franchisee requires additional marketing assistance beyond what the Brand Marketing Fee covers, they may incur additional fees and charges from the franchisor.