Does Chesters currently receive payment for placing financing for franchisees?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
We do not guarantee your note, lease or obligation. Except as noted below, we do not currently place financing with anyone and do not receive any payment for the placement of financing. We do not have any past or present practice or intention to sell, assign or discount to any third party, in whole or in part, any financing arrangements. We reserve the right to offer financing or assist franchisees in obtaining financing in the future.
Ascentium Capital Equipment Financing Program.
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.
Source: Item 10 — FINANCING (FDD pages 23–24)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, Chesters does not receive fees from Ascentium Capital for referring franchisees for financing. However, the total purchase price franchisees pay to Chesters for core equipment, signage, fixtures, and supplies will be approximately 5% to 10% higher than if they pay cash or finance through a different third party.
Chesters has arranged for Ascentium Capital to offer term loans to franchisees for purchasing core equipment, signage, fixtures, and supplies. The interest rates are fixed at the time the loan is funded, based on factors such as the loan term, amount, credit history, and operating history. As of the issuance date of the 2025 FDD, the interest rate franchisees 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 Chesters as part of their agreement with Ascentium to reduce the annual interest rate from 8.50% to 4.99%, as adjusted from time to time.
Franchisees are required to pay Ascentium a $195 documentation fee for each loan. Depending on the loan amount and collateral requirements, they may also be required to pay a UCC search fee and/or site inspection fee. Loan terms are typically 60 months, but terms from 3 to 6 years may be available. Franchisees may prepay the loan in full, but they must pay all unpaid payments discounted to their present value. Partial prepayments are not allowed. To be eligible for a loan from Ascentium, franchisees must meet Ascentium's credit requirements, and the loan will be secured by the property obtained with the loan proceeds. Ascentium may require the franchisee's owners to personally guarantee the obligations to Ascentium.