What collateral secures the tenant improvement loan for Chesters?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
he Agreement), as amended, with a financial institution and has the following outstanding debt:
| 2024 | 2023 | |
|---|---|---|
| Term loan – interest is payable at 7.25%. | $ 718,235 | $ 1,084,858 |
| The note matures in December 2028, collateralized | ||
| by certain business assets | ||
| Term loan – interest is payable at prime rate minus 0.25%. | 732,745 | 1,428,910 |
| Matures in October 2028, collateralized by | ||
| certain business assets | ||
| Tenant improvement loan – interest is payable at | 540,771 | 238,539 |
| prime rate minus 0.25%. |
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the tenant improvement loan is secured by certain business assets. As of December 31, 2024, the outstanding balance on the tenant improvement loan was $540,771, with interest payable at the prime rate minus 0.25%. The loan matures in October 2028.
In 2023, the tenant improvement loan had a balance of $238,539, with interest payable at 8.25%. Like the 2024 loan, this one also matured in October 2028 and was collateralized by certain business assets.
This means that Chesters uses its business assets as collateral for the tenant improvement loan. If Chesters were to default on the loan, the lender would have a claim on those assets. Prospective franchisees should be aware of this when considering taking out a similar loan to improve their leased premises.