What must a Chatime franchisee do after receiving notification of the Estimated Fees?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) Franchisor may estimate the Royalty and/or the Brand Marketing Fee for the relevant Month by taking into consideration the total Gross Sales for all Outlets in the Territory for the previous Quarter and dividing this by 3 (Estimated Fees);
- (d) Franchisor will notify Franchisee of the Estimated Fees; and
- (e) Franchisee must pay to Franchisor the Estimated Fees in accordance with, and within the time specified in, the notice provided by Franchisor pursuant to clause 6.5(1)(d).
- (2) Franchisor will adjust on Franchisee's account every Quarter any overpayment or underpayment of the Estimated Fees provided that Franchisee has supplied Franchisor with:
- (a) The Monthly Gross Sales information for the Outlet as required under clause 5.4(2)(b); and
- (b) Any other reports set out in the Operations Manual or in any Operations Manual Addendum and in clauses 5.4(1) to 5.4(5),
such that Franchisor is able to properly calculate the Royalty and the Brand Marketing Fee actually payable by Franchisee for the relevant Months.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if a franchisee fails to provide the necessary sales information for Chatime to calculate the royalty and brand marketing fees, Chatime can estimate these fees. This estimation is based on the total gross sales of all outlets in the territory for the previous quarter, divided by three.
Once Chatime notifies the franchisee of these "Estimated Fees", the franchisee is obligated to pay the estimated fees to Chatime. The payment must be made in accordance with the terms and timeframe specified in the notice provided by Chatime.
Chatime will adjust any overpayment or underpayment of the estimated fees on the franchisee's account every quarter. This adjustment is conditional on the franchisee providing the required monthly gross sales information and any other reports outlined in the Operations Manual. This ensures that Chatime can accurately calculate the actual royalty and brand marketing fee payable for the relevant months.
Failure to pay any amount due to Chatime, including the estimated fees, will result in interest being charged on the outstanding amount at the specified interest rate. The interest accrues daily from the date the payment was originally due until it is paid in full. This clause does not obligate Chatime to accept late payments or extend credit to the franchisee.