What happens to any unspent contributions to the Chatime advertising fund, including associated earnings, at the end of the fiscal year?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
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, any unspent contributions to the Brand Marketing Fund, including associated earnings, will remain in the fund for use in subsequent years. This means that the money franchisees contribute, which is 2% of gross sales, isn't lost if it's not spent immediately. Instead, it accumulates and is available for future advertising and promotional activities. This is a common practice in franchising, as advertising campaigns often require significant funds and may span multiple fiscal years.
Chatime retains control over how the Brand Marketing Fund is spent, using it for advertising, marketing, and promotional efforts they designate, as well as for associated administrative expenses. Franchisees should note that there is no guarantee that any portion of their Brand Marketing Fee will be allocated or spent specifically in their territory or region. This is also a fairly typical arrangement, as franchisors often prioritize national or regional campaigns to build brand awareness across the entire system.
Chatime also has the option to terminate the Brand Marketing Fund at any time. However, if the fund is terminated, all remaining monies must be spent for the purposes described in the franchise agreement or returned to the franchisees on a prorated basis. As of December 31, 2024, Chatime had not yet collected or received any advertising funds from any franchisees.