What are all the fees Chesters franchisees might incur, considering both Item 5 and Item 6?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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You must pay us a $3,500 training fee in a lump sum when you sign the Agreement. The training fee is not refundable under any circumstances. During the 2024 fiscal year, the training fees we received from franchisees ranged from $0 to $3,500.
Besides paying the training fee, you must buy various equipment, signage, fixtures, and product inventory before you open your Restaurant. The cost of all items available from us will depend on the Restaurant's anticipated venue and the items already in place. The expected range is $12,000 to $55,000 for a Restaurant to be located in a convenience store or similar retail business. You must have the core equipment to bread, fry, and merchandise CHESTER'S menu items. You may buy this equipment from us or use existing equipment we approve. You may buy certain proprietary food products and preparation supplies from unaffiliated suppliers. However, as described in Item 8, we have the right to require you to buy some or all of these items from designated exclusive sources, including us. None of the amounts you pay to us for any special order equipment is returnable and refundable, unless approved in advance by us. Special order equipment includes electric and/or gas powered cooking or food holding equipment, any custom signage, and other custom marketing materials. All other amounts paid to us for various equipment, signage, fixtures, and product inventory are refundable to you.
If you cancel your order for various equipment, signage, fixtures, and product inventory within 3 weeks from the estimated shipping date, or after some or all of the products are received by Chester's, then we may charge you a product cancellation fee equal to 10% of the total amount that is canceled. If you return any equipment, signage, fixtures, or product inventory to us any time, then we may charge you a restocking fee equal to 20% of the total amount that is returned, plus any freight cost we incur on your behalf. If we determine that you have failed to participate in the required pre-opening activities as required under your franchise agreement, then in addition to any remedy available to us under the franchise agreement, we may charge you a one-time storage fee equal to 10% of the total amount of the stored item(s) for storing any equipment, signage, fixtures, or product inventory that you ordered, but that we have not yet delivered to your Restaurant.
Before you open your Restaurant, we will conduct a restaurant-readiness review assessment at no additional charge to you. However, if we determine that your Restaurant does not pass the assessment and we must reassess the Restaurant multiple times, we have the right to
charge you our costs and expenses. We currently estimate this cost to be approximately $1,000 per assessment. This payment is not refundable.
Financing for Core Equipment, Signage, Fixtures, and Supplies
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.
ITEM 6 OTHER FEES
| Type of fee* | Amount | Due Date | Remarks |
|---|---|---|---|
| Marketing Support Fee | $200 per quarter We have the right to increase this fee upon 90 days’ prior written notice to you, although the quarterly fee will not exceed $325 | 4 times per year on the dates we designate Payment is due by credit card or automatic debit | This is for physical or digital samples of marketing materials we will prepare and periodically send you. We do not require your participation in advertising funds or cooperatives. |
| Marketing Support Fee for Special Offerings or Promotions | Not to exceed $200 per special offering or promotion | When billed Payment is due by credit card or automatic debit | Due if we implement special offerings or promotions for CHESTER’S Restaurants during the franchise term. |
| POS Technology Fee | $250-$325 per month We have the right to increase this fee upon 90 days’ prior written notice to you, although the monthly fee will not exceed $350 | Monthly on the dates we designate (beginning with the month in which you buy the POS system) Payment is due by credit card or automatic debit | Due if you buy the POS system hardware we currently recommend (but have the right to require you to buy during the franchise term). |
| Additional Training or Assistance | Not to exceed $1,000 per day | As incurred Payment is due by credit card or automatic debit | Due for training and assistance beyond what we typically give to franchisees. |
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, franchisees can expect to pay several fees, both initially and on an ongoing basis. The initial fees include a $3,500 training fee, which is non-refundable. Additionally, franchisees must purchase equipment, signage, fixtures, and product inventory, with costs ranging from $12,000 to $55,000 for a restaurant located in a convenience store or similar retail business. There are potential cancellation and restocking fees of 10% and 20% respectively, related to equipment, signage, fixtures and product inventory. If Chesters determines that multiple restaurant-readiness review assessments are needed, the franchisee may be charged approximately $1,000 per additional assessment.
Beyond the initial investment, Chesters franchisees will encounter ongoing fees. A marketing support fee of $200 per quarter is required, which may increase to a maximum of $325 with 90 days' notice. There may also be a marketing support fee for special offerings or promotions, not exceeding $200 per offering. If the franchisee purchases the recommended POS system hardware, a monthly POS technology fee of $250-$325 is charged, potentially increasing to $350 with 90 days' notice.
Additional fees may arise for extra training or assistance beyond what is typically provided, up to $1,000 per day. It's important to note that these fees are subject to change, particularly the marketing support and POS technology fees, with the franchisor providing advance notice of any increases. Franchisees should factor these potential costs into their financial planning and be aware of the conditions under which these fees are incurred.
Chesters also benefits from franchisee purchases from designated suppliers. License fees ranging from 0.5% to 30% of gross sales are paid to Chesters by suppliers of items like shortening products, blended proprietary items, paper goods, and signs and promotional items. These fees are built into the cost of goods sold to the franchisee.