What is the 'Baseline CPI' as it relates to Chop5 Salad Kitchen's fee adjustments?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
We may review these fees every every two (2) years and increase the fees based on CPI changes, but only if the then-current CPI ("Current CPI") is more than 5% higher than the corresponding CPI in effect on: (a) the Effective Date of this Agreement (for the initial fee adjustments); or (b) the date we implemented the last fee adjustment (for subsequent fee adjustments) ("Baseline CPI").
The adjusted fee shall be calculated by multiplying the current fee by a fraction: (a) the numerator of which is an amount calculated as the product of (i) 100 and (ii) the difference of Current CPI minus Baseline CPI; and (b) the denominator of which is Baseline CPI.
We may utilize any CPI index series published by the U.S. Department of Labor or any comparable Governmental Authority that we deem appropriate.
We currently use the following index: All Urban Wage Earners and Clerical Workers (CPI-W), U.S. City Average (1982-84 = 100), "All Items".
We will notify you of any CPI adjustment at least 60 days before the fee adjustment becomes effective.
If we, in our sole discretion, determine not to increase the fees in a given two-year period despite a 2% or greater
Source: Item 23 — RECEIPT (FDD pages 50–178)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, the Baseline CPI is the Consumer Price Index (CPI) in effect on specific dates, used as a reference point for potential fee adjustments. For initial fee adjustments, the Baseline CPI is the CPI in effect on the effective date of the franchise agreement. For subsequent fee adjustments, it is the CPI on the date Chop5 Salad Kitchen implemented the last fee adjustment.
Chop5 Salad Kitchen reserves the right to periodically adjust fixed dollar amount fees based on changes to the Consumer Price Index (CPI) in the United States. These fees may be reviewed every two years and increased if the Current CPI is more than 5% higher than the Baseline CPI. The Current CPI refers to the then-current CPI at the time of review.
The adjusted fee is calculated by multiplying the current fee by a fraction. The numerator is 100 multiplied by the difference between the Current CPI and the Baseline CPI. The denominator is the Baseline CPI. Chop5 Salad Kitchen uses the CPI index series for All Urban Wage Earners and Clerical Workers (CPI-W), U.S. City Average (1982-84 = 100), "All Items". Chop5 Salad Kitchen will notify franchisees of any CPI adjustment at least 60 days before it takes effect. If Chop5 Salad Kitchen chooses not to increase fees in a two-year period despite a qualifying CPI increase, that potential increase can be carried forward to a later adjustment.