What is the 'Current CPI' as it relates to Chop5 Salad Kitchen's fee adjustments?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
We reserve the right to periodically adjust all fees expressed as a fixed dollar amount based on changes to the Consumer Price Index (CPI) in the United States.
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
CPI increase, that potential fee increase will accumulate and may be carried forward and applied in connection with a subsequent fee adjustment.
Source: Item 23 — RECEIPT (FDD pages 50–178)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, the Current CPI is a factor in determining fee adjustments. Chop5 Salad Kitchen reserves the right to adjust fees that are expressed as a fixed dollar amount based on changes to the Consumer Price Index (CPI) in the United States.
The Current CPI is the CPI in effect at the time Chop5 Salad Kitchen reviews these fees, which they may do every two years. However, fee increases will only occur if the Current CPI is more than 5% higher than the Baseline CPI. The Baseline CPI is defined as the CPI in effect on either the effective date of the Franchise Agreement for initial fee adjustments, or the date of the last fee adjustment for subsequent adjustments.
The adjusted fee is calculated by multiplying the current fee by a fraction. The numerator of this fraction is the product of 100 and the difference between the Current CPI and the Baseline CPI. The denominator is the Baseline CPI. Chop5 Salad Kitchen uses the All Urban Wage Earners and Clerical Workers (CPI-W), U.S. City Average (1982-84 = 100), "All Items" index, but may utilize any CPI index series published by the U.S. Department of Labor or any comparable Governmental Authority that they deem appropriate.
Chop5 Salad Kitchen will notify franchisees of any CPI adjustment at least 60 days before it takes effect. Even if the CPI increases by 5% or greater in a given two-year period, Chop5 Salad Kitchen has the discretion to not increase fees. If they choose not to increase fees, that potential increase can be carried forward and applied to a later fee adjustment.