Under what conditions can Chatime terminate the advertising fund?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
We may terminate the fund at any time, but we will not do so until all monies in the fund have been spent for the purposes described in the franchise agreement or returned to contributors on a prorated basis. (Clause 7.3 of the Franchise Agreement). As of December 31, 2024, we had not yet collected or received any advertising funds from any franchisees.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 27–35)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime may terminate the Brand Marketing Fund at any time. However, there are stipulations on how the funds must be handled. Chatime is not allowed to terminate the fund until all the money in it has been spent for the purposes outlined in the franchise agreement. Alternatively, Chatime can choose to return the remaining money to the contributors, which would be the franchisees, on a prorated basis.
This means that while Chatime has the right to end the advertising fund, they must either use the existing funds for advertising and promotion as intended or return the unused portion to the franchisees who contributed to it. This provides some assurance to franchisees that their contributions will be used appropriately or returned if the fund is discontinued.
It is important for prospective franchisees to understand that Chatime has full discretion over how the Brand Marketing Fund is spent, and there is no guarantee that any of a franchisee's contributions will be used for advertising specifically in their territory or region. The ability to terminate the fund adds another layer of potential change that franchisees should consider, although the requirement to spend or return the funds offers some protection.