What must a Chatime franchisee do to ensure the Franchisor adjusts any overpayment or underpayment of Estimated Fees every Quarter?

According to Chatime's 2025 Franchise Disclosure Document, the franchisor will adjust any overpayment or underpayment of estimated fees every quarter, provided the franchisee meets specific requirements. These adjustments relate to instances where Chatime estimates the royalty and brand marketing fee due to missing sales information. To ensure these quarterly adjustments, a franchisee must supply Chatime with the monthly gross sales information for the outlet, as required under clause 5.4(2)(b). Additionally, the franchisee must provide any other reports outlined in the Operations Manual, any Operations Manual Addendum, and clauses 5.4(1) to 5.4(5).

These reports and sales data are crucial because they enable Chatime to accurately calculate the royalty and brand marketing fee that the franchisee actually owes for the relevant months. Without this information, Chatime cannot properly reconcile the estimated fees with the actual fees, potentially leading to discrepancies that would not be corrected.

It is important for prospective Chatime franchisees to understand these reporting requirements and ensure they are capable of meeting them consistently. Failure to provide the necessary information could result in the franchisee not receiving proper credit for overpayments or being unaware of underpayments, which could lead to further financial complications or disputes with the franchisor. Therefore, franchisees should familiarize themselves with the Operations Manual and any addenda to fully understand their reporting obligations.