How does the Ascentium Capital Equipment Financing mentioned in Item 10 for Chesters relate to the equipment purchases required in Item 5?
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.
If you obtain financing for core equipment, signage, fixtures, and supplies through Ascentium (see Item 10), the purchase price for core equipment, signage, fixtures, and supplies will be our then current bona fide wholesale price plus an additional 5% to 10% of the purchase price, which is roughly equivalent to the amount that Ascentium will deduct from their payment to us for the core equipment, signage, fixtures, and supplies as part of our arrangement to reduce the interest rate for the financing you obtain through Ascentium. See Item 10.
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, Item 10 details the Ascentium Capital Equipment Financing Program, which is directly related to the equipment purchases outlined in Item 5. Chesters has arranged for Ascentium Capital, a third-party lender, to offer term loans to franchisees for financing the purchase of core equipment, signage, fixtures, and supplies needed for their restaurants.
Specifically, Item 5 mentions that Ascentium Capital will pay Chesters the financed amount for the purchased core equipment, signage, fixtures, and supplies. While franchisees do not pay any monies or fees directly to Chesters, the cost of obtaining financing through Ascentium is reflected in the purchase price. Item 8 notes that if a franchisee obtains financing through Ascentium, the purchase price for the core equipment, signage, fixtures, and supplies will be Chesters's current bona fide wholesale price plus an additional 5% to 10% of the purchase price. This additional cost is equivalent to the amount that Ascentium deducts from their payment to Chesters as part of their arrangement to reduce the interest rate for the franchisee.
The interest rate available to franchisees on Ascentium loans may vary over time. As of the issuance date of the 2025 FDD, the interest rate 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. This arrangement means that while Chesters does not receive fees from Ascentium for referring franchisees, the total purchase price paid by the franchisee for the core equipment, signage, fixtures, and supplies will be approximately 5% to 10% higher than if they paid cash or financed through a different third party.