What happens if Chesters revokes approval of a particular product or supplier?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the right to revoke our approval of particular products or suppliers when we determine that those products or suppliers no longer meet our standards. If we notify you that we have revoked approval of a product or supplier, you must stop selling any disapproved products and stop purchasing from any disapproved supplier. We and our affiliates have the right to receive payments from suppliers on account of their actual or prospective dealings with you and other franchisees and to use all amounts received without restriction for any purposes we deem appropriate (unless we and our affiliates agree otherwise with the suppliers). Certain suppliers to our franchisees (who sell directly to franchisees or indirectly through distributors in the supply
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, Chesters has the right to revoke approval of particular products or suppliers if they no longer meet the company's standards. If Chesters notifies a franchisee that approval of a product or supplier has been revoked, the franchisee must immediately stop selling the disapproved products and cease purchasing from the disapproved supplier. This mandate ensures that all Chesters locations maintain consistent quality and standards.
This requirement is common in franchising, as franchisors need to protect their brand's reputation and ensure uniformity across all locations. For a prospective Chesters franchisee, this means they must be prepared to switch suppliers or discontinue products if Chesters deems it necessary. Failure to comply with these directives could result in penalties or even termination of the franchise agreement.
Chesters also benefits financially from these supplier relationships. The document states that Chesters and its affiliates have the right to receive payments from suppliers based on their dealings with franchisees and can use these funds without restriction, unless otherwise agreed with the suppliers. Furthermore, certain suppliers pay Chesters license fees ranging from 0.5% to 30% of their gross sales on items like shortening, blended proprietary items, paper goods, and signs and promotional items. This revenue stream highlights the importance of approved supplier relationships to Chesters's overall business model.