If Chatime or its nominee operates and manages a Chatime franchise business due to the franchisee ceasing operations, what costs, beyond the hourly rate, are included in the Temporary Management Fee?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| Fee(1) Type of | Amount | Due Date | Remarks |
|---|---|---|---|
| Temporary Management Fee | Commercially reasonable fee not less than $30 per hour plus costs of travelling, accommodation, meals, and other expenses for operating and managing the Store | As invoiced | If you cease to conduct operations or abandon your franchise business, we or our nominee may, but are not required to, enter your business premises and operate and manage your franchise business until you comply with our direction or notice requiring you to recommence operations. You will pay us a reasonable Temporary Management Fee we determine and our associated expenses including, without limitation, costs for employee wages and entitlements, travel, accommodations, and meals. |
Source: Item 6 — Other Fees (FDD pages 13–17)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if a franchisee ceases operations and Chatime or its nominee steps in to manage the franchise, the Temporary Management Fee includes more than just an hourly rate. Specifically, the franchisee will be responsible for a commercially reasonable fee, not less than $30 per hour, along with the costs of traveling, accommodation, meals, and other expenses incurred while operating and managing the store.
This means that in addition to the hourly fee, a Chatime franchisee who has ceased operations will also have to cover expenses such as travel, lodging, and food for the management team that Chatime sends in. The franchisee is also responsible for other associated expenses including, without limitation, costs for employee wages and entitlements.
This could potentially become a substantial financial burden for the franchisee, especially if the period of temporary management is extended. It is important to note that the Temporary Management Fee is invoiced to the franchisee, and the expenses are in addition to any other fees or costs outlined in the Franchise Agreement.