What is the relationship between the initial franchise fee for Chatime (Item 5) and the potential for multi-unit development agreements, considering the specific terms and conditions of such agreements?
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 number of units you open.
| Number of Chatime Stores | Multi-Unit Development Fee | |
|---|---|---|
| Due at Signing | ||
| 2 | $98,900 | |
| 3 | $134,900 | |
| Additional Stores | $20,000 each (For ten locations, the total is $274,900) | # Opening Inventory and Supplies |
You must purchase from our affiliates an initial inventory of food products, supplies and equipment before opening your Chatime Store. The assortment and number of these items will vary depending on the size, configuration, and storage capacity of the Chatime Store, the specifics of the location, the season of the year, and other factors. The estimated cost of the opening inventory is $10,000 to $16,000. The cost is non-refundable.
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the initial franchise fee and multi-unit development agreements are related in that the multi-unit development fee serves as a credit against the initial franchise fees. The standard initial franchise fee for a single Chatime store is $54,900. However, Chatime offers multi-unit development agreements where franchisees commit to opening multiple stores within a specific area and timeframe.
For franchisees pursuing a multi-unit development agreement, a non-refundable multi-unit development fee is paid upon signing the agreement. This fee varies depending on the number of Chatime locations the franchisee commits to opening. Specifically, the fee is $98,900 for two locations, $134,900 for three locations, and $134,900 plus $20,000 for each additional location beyond three, up to $274,900 for ten locations.
The key benefit of the multi-unit development fee is that it acts as a full credit against the initial franchise fees for each individual Chatime store, including the first one. This means that franchisees entering into a multi-unit agreement do not have to pay the standard $54,900 initial franchise fee for each location separately. While the multi-unit development fee is non-refundable regardless of how many units are eventually opened, it can be financially advantageous for franchisees planning to establish multiple Chatime locations, as it potentially reduces the overall upfront investment compared to acquiring single-unit franchises independently. The estimated initial investment for a multi-unit development agreement for three to ten locations ranges from $373,100 to $699,900, which includes the multi-unit development fee and the estimated initial investment to open the initial Chatime store.