What was the amount of the loss on distributor agreement termination for Chesters in 2024?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
ITY FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023**
| 2024 | 2023 | |
|---|---|---|
| REVENUES: | ||
| Product sales | $ 27,865,394 | $ 44,962,498 |
| Other revenue | 12,246,716 | 6,370,755 |
| Franchise fees | 246,000 | 286,274 |
| 40,358,110 | 51,619,527 | |
| OPERATING EXPENSES: | ||
| Cost of product sales | 21,752,259 | 33,882,255 |
| Advertising expenses | 199,081 | 165,180 |
| Selling, general and administrative expenses | 15,340,272 | 14,504,501 |
| Depreciation and amortization | 522,927 | 462,783 |
| 37,814,539 | 49,014,719 | |
| OPERATING INCOME | 2,543,571 | 2,604,808 |
| OTHER INCOME (EXPENSE) | ||
| Loss on distributor agreement termination | (2,514,311) | - |
| Interest income | 92,633 | 20,370 |
| Other (expense) income | (10,032) | 96,706 |
| Interest expense | (181,560) | (139,101) |
| Total other expense | (2,613,270) | (22,025) |
| NET INCOME | (69,699) | 2,582,783 |
| MEMBERS' EQUITY AT BEGINNING OF YEAR | 4,861,345 | 4,098,834 |
| DISTRIBUTIONS | (2,743,252) | (1,820,272) |
| MEMBERS' |
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the loss on distributor agreement termination for the year 2024 was $(2,514,311). This figure represents a financial loss incurred by Chesters due to the termination of a distributor agreement during that fiscal year.
For a prospective franchisee, this indicates that Chesters's financial performance can be affected by events such as the termination of distributor agreements. While such events may be infrequent, they can have a significant impact on the company's profitability, as demonstrated by the multi-million dollar loss in 2024. It's worth noting that there was no such loss in the previous year, 2023, suggesting this was an unusual event.
This information is crucial for potential franchisees as it provides insight into the financial risks Chesters faces. Franchisees should consider these risks when evaluating the stability and potential profitability of the franchise. Further due diligence, such as inquiring about the circumstances surrounding the distributor agreement termination and Chesters's strategies for mitigating similar losses in the future, would be advisable.