Was Chesters in compliance with all financial covenants as of December 31, 2024?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
------| | 2026 | 580,684 | | 2027 | 448,557 | | 2028 | 300,148 | | 2029 | 116,999 $ 1,991,751 | The Agreement includes a revolving loan for maximum borrowings up to $1,000,000 that matures December 31, 2026. Interest is calculated at the greater of 5% or Prime rate plus 1% (8.5% at December 31, 2024 and 2023) and secured by essentially all business assets. There were no amounts outstanding under the revolving loan as of December 31, 2024 and 2023. The revolving loan matures on December 31, 2026.
As part of the Agreement, the Company is required to comply with financial and nonfinancial covenants. Management believes it was in compliance with all covenants as of December 31, 2024. The Company was not in compliance with certain financial covenants for the yea
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, Chesters had a revolving loan agreement that allows for maximum borrowings of up to $1,000,000, maturing on December 31, 2026. The interest rate is calculated as the greater of 5% or the Prime rate plus 1%, which was 8.5% as of December 31, 2024, and is secured by essentially all of Chesters' business assets.
As part of this loan agreement, Chesters is required to comply with both financial and nonfinancial covenants. Chesters' management believes that the company was in compliance with all of these covenants as of December 31, 2024.
However, Chesters was not in compliance with certain financial covenants for the year ended December 31, 2023, but the bank granted a waiver for this noncompliance during 2024. This indicates that while Chesters believes it is currently meeting its financial obligations, it has faced challenges in the recent past. Prospective franchisees should carefully review Chesters' financial statements and inquire about the specific covenants and the reasons for the previous non-compliance to fully understand the company's financial health and obligations.