Under what condition will Chatime adjust any overpayment or underpayment of Estimated Fees on the franchisee's account?

According to Chatime's 2025 Franchise Disclosure Document, Chatime will adjust any overpayment or underpayment of Estimated Fees on the franchisee's account every quarter. This adjustment is conditional upon the franchisee providing Chatime with the necessary financial information. Specifically, the franchisee must supply the monthly gross sales information for the outlet as required under clause 5.4(2)(b). Additionally, the franchisee needs to provide any other reports outlined in the Operations Manual, any Operations Manual Addendum, and clauses 5.4(1) to 5.4(5).

This provision ensures that Chatime can accurately calculate the Royalty and Brand Marketing Fee that the franchisee actually owes for the relevant months. By providing the required financial data, franchisees enable Chatime to reconcile the estimated fees with the actual fees, leading to a fair financial settlement. This process protects both the franchisee and Chatime by ensuring that neither party is unduly profiting or losing out due to inaccurate fee estimations.

For a prospective Chatime franchisee, this means diligent record-keeping and timely submission of financial reports are crucial. Failure to provide the necessary information could delay or prevent the adjustment of overpayments or underpayments, potentially leading to financial discrepancies. Franchisees should familiarize themselves with the specific requirements outlined in clause 5.4(2)(b), the Operations Manual, and any related addenda to ensure compliance and facilitate accurate fee adjustments. Understanding these requirements is essential for maintaining a transparent and equitable financial relationship with Chatime.