What is included in the definition of 'Gross Sales' for a Chatime franchise when calculating royalty fees?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| Fee(1) Type of | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty | 5.0% of Gross Sales | Tenth day of the month calculated based on the Gross Sales of the previous month | "Gross Sales" means the total actual gross charges for all products, merchandise, and services sold to your Store's customers for cash or credit, whether such sales are made at or from the premises of your Store or any other location or other channels of distribution if approved in writing in advance by us and including proceeds from any business interruption or similar insurance coverage, but excluding (i) sales, use, service, or excise taxes collected from customers and paid to the appropriate taxing authority and (ii) all customer refunds, adjustments and promotional discountsincluding any senior citizens discount. |
Source: Item 6 — Other Fees (FDD pages 13–17)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, 'Gross Sales' is a key figure used to calculate royalty fees, which are set at 5.0% of Gross Sales. These royalties are due on the tenth day of each month, based on the previous month's Gross Sales.
For Chatime, 'Gross Sales' encompasses the total actual gross charges for all products, merchandise, and services sold to customers. This includes both cash and credit sales, whether they occur at the store's premises or through other distribution channels, provided these channels have received prior written approval from Chatime. Gross Sales also includes proceeds from any business interruption or similar insurance coverage.
However, the definition of 'Gross Sales' for Chatime excludes certain items. Specifically, it does not include sales, use, service, or excise taxes collected from customers and remitted to the appropriate taxing authority. Additionally, all customer refunds, adjustments, and promotional discounts, including any senior citizens discounts, are excluded from the 'Gross Sales' calculation. This definition provides clarity for franchisees in calculating their royalty payments, ensuring that only the net sales figure is used.