What is the maximum interest rate per month that Chatime can charge?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
In the ordinary course of business, the Company periodically advances funds to and receives funds from the Member of the Company. No interest is charged on these advances. Advances to and from the Member are noninterest bearing and have no specific date for repayment. The balance due from Member amounted to $20,108 and $300,000 at December 31, 2024 and 2023, respectively. Management expects these balances to be settled within the next year. The balance due to Member amounted to $60,015 and $- at December 31, 2024 and 2023, respectively. Management does not expect these balances to be settled within the next year.
| 9. | Do you understand that the success or failure of your franchise business will depend in large part upon your skills and experience, your business acumen, your location, the local market for products under the Chatime trademarks, interest rates, the economy, inflation, the number of employees you hire and their compensation, competition, and other economic and business factors? Further, do you understand that the economic and business factors that exist at the time you open your Chatime Store may change? Check one ( ) Yes ( ) No. If no, please comment: |
On September 23, 2022, the Licensee Parties entered into a 30-year non-exclusive license agreement with the Licensor for the use of the registered name "Chatime" (the "license agreement"). Pursuant to the license agreement, the Licensee Parties acquired the rights to sell "Chatime" franchises, and the right to earn franchise fees, royalties and other fees from franchisees. The license agreement will be renewed as long as a request for renewal has been submitted at least six months prior to the expiration term, for successive terms of 10 years, unless one party provides the other party with notice of its intention not to renew the license agreement at least 90 days before the end of the thencurrent term. The Company pays a 1.25% monthly royalty fee to the Licensor based on franchise outlet gross sales. Royalties paid to the Licensor for the
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
The 2025 Chatime Franchise Disclosure Document does not explicitly state the maximum interest rate Chatime can charge a franchisee per month. However, it does mention related-party transactions where no interest is charged on funds advanced to or received from the Member of the Company. It also includes a license agreement where the Company pays a 1.25% monthly royalty fee to the Licensor based on franchise outlet gross sales. This royalty fee is different from interest charged to a franchisee.
Item 9 of the FDD receipt pages acknowledges that interest rates are a factor that can influence the success or failure of a franchise. This suggests that franchisees may encounter interest rate charges in some form, although the document does not specify from whom or under what circumstances these charges might arise.
To gain clarity, a prospective Chatime franchisee should ask the franchisor about any circumstances under which interest may be charged, the maximum allowable interest rate, and the conditions under which such rates would be applied. Understanding these potential costs is crucial for accurate financial planning.