How does the Ascentium Capital Equipment Financing (Item 10) potentially alleviate the financial burden of the initial investment costs for Chesters (Item 7)?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
As detailed in Item 10, we have a program with a third-party equipment lender, Ascentium Capital, a division of Regions Bank ("Ascentium"), to finance the purchase price for certain of the core equipment, signage, fixtures, and supplies you will need for your Restaurant. You will not pay us any monies or fees directly, but Ascentium will pay us the financed amount for the purchased core equipment, signage, fixtures, and supplies you will need for your Restaurant.
We have arranged for third-party Ascentium (defined in Item 5) to offer term loans to our franchisees to finance your purchase of certain core equipment, signage, fixtures, and supplies you will need for your Restaurant. A copy of the Ascentium Equipment Finance Agreement (1 page and 2 page versions) and the related prepayment addendums, currently used by Ascentium are attached to this disclosure document as Exhibit G. Key terms of the current Ascentium Equipment Finance Agreement are detailed below.
Franchisees will pay fixed monthly payments of principal and interest accruing on the loan. Interest rates will be fixed at the time the loan is funded based on factors including length of term, loan amount, Ascentium's cost of funds, your credit history and operating history, and other relevant risk factors. These factors will also be considered in setting your monthly loan payment amount. As of the issuance date of this disclosure document, the rate of interest you will pay on each loan from Ascentium is approximately 4.99% per annum, but Ascentium will actually earn an annual interest rate of approximately 8.50% on each loan because Ascentium will deduct an amount equal to approximately 5% to 10% of the total purchase price for the core equipment, signage, fixtures, and supplies from the amount paid to us as part of our agreement with Ascentium to reduce your annual interest rate from 8.50% to 4.99%, as adjusted from time to time. The interest rate available to franchisees on Ascentium loans may vary over time. We do not receive any fees from Ascentium for referring our franchisees to Ascentium for financing, but as noted above and in Item 10 the total purchase price you pay to us for the core equipment, signage, fixtures, and supplies will be approximately 5% to 10% higher than if you pay us cash or finance through a different third party.
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, Ascentium Capital, a third-party lender, offers financing to franchisees for the purchase of core equipment, signage, fixtures, and supplies needed to open a Chesters restaurant. This arrangement can ease the initial financial burden on franchisees by allowing them to pay for these essential items over time through fixed monthly payments, rather than requiring a large upfront cash outlay.
The interest rates on these loans are fixed at the time the loan is funded and depend on factors such as the loan term, loan amount, the franchisee's credit and operating history, and Ascentium's cost of funds. As of the issuance date of the FDD, the interest rate was approximately 4.99% per annum; however, Ascentium earns an annual interest rate of approximately 8.50% because they deduct 5% to 10% of the total purchase price from the amount paid to Chesters to reduce the franchisee's interest rate.
While Chesters does not receive fees from Ascentium for the referral, the purchase price for the core equipment, signage, fixtures, and supplies will be approximately 5% to 10% higher than if the franchisee pays cash or finances through a different third party. This difference compensates Ascentium for reducing the interest rate offered to the franchisee. This financing option allows franchisees to spread out the costs of essential equipment and supplies, making it more accessible to start a Chesters franchise.