Are the financial statements of the Chatime advertising fund audited?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
We will administer the fund. The financial statements of the fund will not be audited and will be made available to you for your review, at your written request, within six months after the end of our fiscal year. Other than reimbursement for reasonable costs and overhead incurred in activities for the administration or direction of the fund, neither we nor any affiliate will receive any payment for providing services or products to the fund. If we spend more than the contributions accumulated in the fund during any fiscal year, we may receive, on demand, reimbursement in later years to the extent of the excess expenditure. We will not be required to spend any amount from the fund on advertising or promotions in your area. Any local, regional or national advertising efforts may not equitably reach all markets. If any contributions to the fund, including any associated earnings, are not spent in the fiscal year in which they accrue, they will remain in the fund for use in following years. We may terminate the fund at any time, but we will not do so until all monies in the fund have been spent for the purposes described in the franchise agreement or returned to contributors on a prorated basis. (Clause 7.3 of the Franchise Agreement). As of December 31, 2024, we had not yet collected or received any advertising funds from any franchisees.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 27–35)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the financial statements of the Brand Marketing Fund will not be audited. However, these financial statements will be available for franchisee review upon written request within six months after the end of Chatime's fiscal year.
Chatime franchisees are required to contribute 2% of their gross sales to the Brand Marketing Fund, which is used for advertising, marketing, and promotional efforts, as well as associated administrative expenses. Company-owned and affiliate-owned locations also contribute to this fund at the same rate as franchisees. The franchisor, Chatime, manages the fund and decides how the money is spent.
While the financial statements are not audited, franchisees have the right to request and review them, providing some level of transparency. It is important to note that there is no guarantee that any portion of a franchisee's Brand Marketing Fee will be allocated or spent for advertising specifically in their territory or region. As of December 31, 2024, Chatime had not yet collected or received any advertising funds from any franchisees.