If a franchisee signs a multi-unit development agreement with Chatime, does the Multi-Unit Development Fee serve as a credit towards the Initial Franchise Fees for each location?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
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Franchise Fees
You will pay us a nonrefundable "Initial Franchise Fee" of $54,900 when you sign the Franchise Agreement. If you give us notice of termination within seven days after execution of your Franchise Agreement, we will return the Initial Franchise Fee within 14 days after receiving your notice of termination.
We also offer multi-unit development agreements under which you agree to open and operate an agreed number of Chatime Stores within a specific geographic area according to an agreed development schedule. If you enter into a multi-unit development agreement, you will pay us a non-refundable multi-unit development fee at the time of signing the multi-unit development agreement. The amount of the multi-unit development fee will depend on the number of locations to be opened. For each location, you will have to sign a separate individual unit franchise
agreement in our then-current form of franchise agreement, which may be different than our current form of franchise agreement. The multi-unit development fee ("Multi-Unit Development Fee") will serve as a full credit against the initial franchise fees for each location (including the first location), so that you will not be required to pay an Initial Franchise Fee at the time you sign each Franchise Agreement for each location.
The Multi-Unit Development Fee is as follows: For two locations, the fee is $98,900. For three locations, the fee is $134,900. For more than three locations, the fee is $134,900 plus $20,000 for each additional location. For ten locations, the fee is $274,900. The multi-unit development fee is fully-earned by us upon receipt and is not refundable under any circumstances, regardless of the n
Source: Item 5 — Initial Fees (FDD pages 11–13)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the Multi-Unit Development Fee does serve as a credit towards the initial franchise fees for each location. Specifically, the FDD states that the Multi-Unit Development Fee will serve as a full credit against the initial franchise fees for each location, including the first location. This means that franchisees entering into a multi-unit development agreement will not be required to pay a separate Initial Franchise Fee of $54,900 for each individual Chatime store they open under the development agreement.
The Multi-Unit Development Fee varies depending on the number of Chatime locations the franchisee commits to opening. For example, the fee is $98,900 for two locations, $134,900 for three locations, and $274,900 for ten locations. For more than three locations, the fee is $134,900 plus $20,000 for each additional location. This fee is non-refundable, regardless of how many units the franchisee ultimately opens.
This arrangement is common in franchising, as it incentivizes franchisees to commit to developing multiple units, allowing Chatime to expand more rapidly. While the initial outlay for the Multi-Unit Development Fee is substantial, it eliminates the need to pay the standard Initial Franchise Fee for each store, potentially saving the franchisee a significant amount of money, especially when developing a large number of units. However, it's important to note that franchisees will still need to cover other costs such as opening inventory, technology systems, uniforms, and initial training, which can range from $80,900 to $91,400 for a single unit, as well as real estate, construction, and other operating expenses.