Does Chesters or its affiliates have the right to receive payments from suppliers based on their dealings with franchisees?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
We and our affiliates have the right to receive payments from suppliers on account of their actual or prospective dealings with you and other licensees and to use all amounts we receive without restriction for any purposes we deem appropriate (unless we and our affiliates agree otherwise with the suppliers).
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, Chesters and its affiliates have the right to receive payments from suppliers based on their dealings, actual or prospective, with franchisees and licensees. Chesters can use these payments without restriction for any purpose they deem appropriate, unless they have agreed otherwise with the suppliers.
This arrangement is common in franchising, where franchisors negotiate deals with suppliers and receive rebates or commissions based on franchisee purchases. This can create a revenue stream for Chesters and potentially lower costs for franchisees if the franchisor negotiates favorable pricing. However, it also means that Chesters has the discretion to use these funds as they see fit, which may or may not directly benefit the franchisees.
Prospective franchisees should inquire about the specific arrangements Chesters has with its suppliers, how these arrangements might affect the cost of goods, and how the payments received from suppliers are used by Chesters. Understanding these financial relationships can help franchisees assess the overall value and transparency of the franchise system.