How are Chatime's royalties earned?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (60) Royalty means a royalty in the amount of five percent (5%) of Gross Sales.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the royalty is 5% of Gross Sales. Gross sales would include all revenue from the Chatime store, and the franchisee is responsible for remitting 5% of that revenue to Chatime as a royalty payment.
It is important to note that Chatime also pays a royalty to its licensor. The document states that Chatime pays a 1.25% monthly royalty fee to the Licensor based on franchise outlet gross sales. For the year ended December 31, 2024, these royalties totaled $22,115. This detail is relevant to franchisees as it highlights the franchisor's own financial obligations and the importance of gross sales to the entire Chatime network.
Prospective franchisees should carefully consider the royalty structure and its impact on their potential profitability. Understanding how gross sales are defined and tracked is crucial for accurate royalty calculations and financial planning. Additionally, franchisees should inquire about any potential changes to the royalty structure in the future.