How will Chesters franchisees make payments under the Ascentium Capital Equipment Financing Program?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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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.
Loan terms are typically 60 months but terms from 3 to 6 years may be available (depending upon the circumstances). You may prepay the loan in full but you must pay all unpaid Payments discounted to their present value as of the prepayment date using a per annum discount rate equal to the lower of (i) the interest rate set forth in the Agreement or (ii) 3%. You may not make partial prepayments.
To be eligible for a loan from Ascentium, you must meet the credit requirements of Ascentium. The loan will be secured by the property you are obtaining with the loan proceeds.
Source: Item 10 — FINANCING (FDD pages 23–24)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, franchisees utilizing the Ascentium Capital Equipment Financing Program will make fixed monthly payments covering both the principal and interest accruing on the loan. The interest rates are determined at the time the loan is funded, influenced by factors such as the loan term, the loan amount, Ascentium's cost of funds, the franchisee's credit and operating history, and other risk factors. As of the issuance date of the FDD, the interest rate is approximately 4.99% per annum; however, Ascentium earns an annual interest rate of approximately 8.50% because Ascentium deducts 5% to 10% of the total purchase price for the core equipment, signage, fixtures, and supplies from the amount paid to Chesters. This arrangement between Ascentium and Chesters effectively reduces the franchisee's annual interest rate from 8.50% to 4.99%, subject to adjustments over time.
If a Chesters franchisee makes a payment late, they must pay Ascentium a late charge of 10% of the payment amount, provided that it does not exceed the highest rate allowed by applicable law. Additionally, Ascentium may charge a $30 fee for any payment returned by the franchisee's bank for any reason, again not exceeding the maximum amount permitted by law. The franchisee is also responsible for insuring the collateral at their own cost against all losses during the loan term. Failure to maintain insurance allows Ascentium to obtain insurance on the collateral, with all associated charges, including administrative fees, payable by the franchisee.
Chesters franchisees are required to pay Ascentium a $195 documentation fee for each loan. Depending on the loan amount and collateral requirements, franchisees may also be required to pay a UCC search fee and/or a site inspection fee. Franchisees may prepay the loan in full, but they must pay all unpaid payments discounted to their present value as of the prepayment date, using a per annum discount rate equal to the lower of (i) the interest rate set forth in the Agreement or (ii) 3%. Partial prepayments are not allowed. Defaulting on loan payments, insolvency, bankruptcy filings, or breaches of any agreement with Ascentium can trigger default under the loan, potentially leading to accelerated payment requirements and repossession of collateral.