Who bears the risk for the business and financial suitability of the Chesters restaurant location?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
We first must approve your site before signing the Agreement, even if you already have a site picked out for the Restaurant. When you approach us, we will give you our site-selection criteria for a Restaurant. Factors we consider in evaluating Restaurant sites include (1) a site's visibility from adjacent traffic arteries, (2) ease of entry from and exit to adjacent streets, (3) the size, density, and income levels of population in the surrounding area, (4) the rental market in the area, (5) types of nearby businesses, (6) projected cost of leasehold improvements, and (7) proximity to another franchised Restaurant or to a Licensed Restaurant. We must accept all sites before you have the right to sign any lease, sublease, or other document for the site. We will evaluate the information you give us about a site. Our review process might or might not involve a physical site inspection. We will not take an unreasonable amount of time to review your proposed site. However, we need not respond within any particular time. We will either accept or reject your proposed site. We will not unreasonably withhold our acceptance of a site but can reject one we consider inappropriate. Although we have the right to accept or reject a Restaurant's location, we will not select or designate a Restaurant site for you. Therefore, you must actively conduct the site-selection process. You have sole risk for your location's business and financial suitability. As noted above, we will not sign the Agreement if you have not yet located the Restaurant's site.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 24–29)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the franchisee bears the sole risk for the business and financial suitability of the restaurant location. While Chesters must approve the site before the franchisee signs any agreement, lease, or sublease, the franchisee is responsible for actively conducting the site-selection process. Chesters provides site-selection criteria for a Restaurant, considering factors such as visibility, ease of access, population density and income levels, rental market, nearby businesses, leasehold improvement costs, and proximity to other Chesters locations. However, Chesters does not select or designate the site for the franchisee.
Chesters's approval process may include a physical site inspection, but the company is not obligated to conduct one. Chesters will either accept or reject the proposed site and will not unreasonably withhold acceptance of a suitable location. Despite Chesters's right to approve or reject a location, the ultimate responsibility for ensuring the location's business and financial viability rests solely with the franchisee.
This arrangement is typical in franchising, where the franchisee, as the business operator, usually bears the risk associated with location performance. While the franchisor offers guidance and approval, the franchisee's local market knowledge and investment are key factors in site selection. Prospective Chesters franchisees should carefully evaluate potential locations, conduct thorough market research, and consider the long-term financial implications before committing to a site.