Under what circumstances is a Chatime franchisee required to pay or reimburse the franchisor for costs?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) Franchisee must pay all Approved Suppliers for all Raw Materials and other Products by the due date for payment and in the manner specified by the Approved Suppliers and comply with the terms of any supplier agreements or terms of trade of the Approved Suppliers.
- (2) In the purchase of Raw Materials and other Products and any other miscellaneous goods from Franchisor, Franchisee must pay:
- (a) The total amount owing to Franchisor for Raw Materials, other Products and any other miscellaneous goods provided to Franchisee by Franchisor from time to time, in accordance with Franchisor's credit policy and Terms of Trade;
Franchisee must pay the Brand Marketing Fee to Franchisor on the tenth day of each Month. The Brand Marketing Fee will be determined based on the Gross Sales of the Outlet for the previous Month.
- (3) If Franchisee requests any additional marketing assistance from Franchisor that, in the opinion of Franchisor, is not within the scope of assistance provided for by the Brand Marketing Fee, then Franchisee must pay to Franchisor upon invoice by Franchisor any additional fees and charges levied by Franchisor for such additional marketing assistance.
Franchisee shall pay Franchisor an Initial Training Fee for the Initial Training.
Franchisor may charge Franchisee a reasonable fee for such additional training, in addition to the travel, meal and accommodation costs of the trainers, and Franchisee must pay that fee upon receipt of an invoice from Franchisor.
- (5) If the Managing Owner or Operating Manager does not satisfactorily complete the initial training program or if we determine that such person cannot satisfactorily complete the training program, or if the Managing Owner or Operating Manager ceases to act as such, then Franchisor may elect to train, at Franchisee's expense, a qualified replacement (who must be reasonably acceptable to us) within 30 days.
In addition to all other remedies and rights of Franchisor under this Agreement, if any of Franchisee, Guarantor, or their Interested Parties breaches clause 9.2 or 9.3, Franchisee must account for and pay to Franchisor all compensation, profits, monies, accruals, increments, or other benefits derived or received as a result of any such breach.
- (1) Franchisee Parties indemnify Franchisor and each of its Affiliates (Chatime Group) against all:
- (a) Losses incurred by the Chatime Group;
- (b) Liabilities incurred by the Chatime Group; and
- (c) All Legal Costs and other Costs and expenses incurred by the Chatime Group in connection with a demand, action, arbitration, or other proceeding (including mediation, compromise, out of court settlement or appeal),
arising directly or indirectly as a result of or in connection with:
- (d) A breach by Franchisee Parties of this Agreement or any Collateral Agreement;
- (e) Any injury to, or loss of property of, any person in or on premises from which the business is conducted;
- (f) Franchisee's taxes, liabilities or Costs of The Franchised Business;
- (g) Any negligent or willful act or omission of Franchisee, its employees, agents, servants, or contractors; and
- (h) Any warranty, promise, or representation made by Franchisee Parties or any employee, agent, or other person acting on behalf of Franchisee Parties being incomplete, inaccurate, or misleading.
Franchisee will be responsible for the payment of all initial and ongoing costs associated with the capture of data by Franchisor's central polling server and must comply with any associated payment procedures specified from time to time in the Operations Manual or Global Policies and Procedures.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a franchisee may be required to pay or reimburse Chatime for costs in several specific instances. These include payment for raw materials and other products purchased from approved suppliers or directly from Chatime, adherence to Chatime's credit policy, and payment of the New Outlet Fee upon signing the Franchise Agreement. Franchisees must also pay a Brand Marketing Fee, and if they request additional marketing assistance outside the scope of the standard Brand Marketing Fee, they must cover those additional charges.
Further, franchisees may incur costs for initial and additional training. While Chatime provides initial training, the franchisee is responsible for the Initial Training Fee and all costs associated with trainees' attendance, including compensation, travel, accommodation, and wages. If Chatime deems additional training necessary, the franchisee must pay a reasonable fee for this training, as well as the travel, meal, and accommodation costs for the trainers. If a Managing Owner or Operating Manager does not complete the training program satisfactorily, Chatime may elect to train a replacement at the franchisee's expense.
Additionally, franchisees are obligated to indemnify Chatime against losses, liabilities, legal costs, and expenses arising from breaches of the Franchise Agreement, injury or loss of property on the premises, franchisee's taxes, negligent acts, or misleading representations. If a franchisee breaches specific clauses related to conduct and confidentiality, they must account for and pay to Chatime all compensation, profits, or benefits derived from such a breach. Franchisees are also responsible for all initial and ongoing costs associated with the point-of-sale system and data capture required by Chatime. Finally, if Chatime appoints a manager due to improper management of the Franchised Business, the franchisee is required to pay for that manager's services as described in clause 14.