When is the liquidated brand damages fee due for a Chesters franchise?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of fee* | Amount | Due Date | Remarks |
|---|---|---|---|
| Indemnification | Will vary under circumstances | As incurred | You must reimburse us if we are held liable for claims from your Restaurant’s operation or incur costs in defending them. |
| Liquidated Brand Damages | $10,000 | As incurred | Due if you or your owners violate non-competition restrictions described in Items 17(q) and (r). |
| De-Branding Fee | $10,000 | As incurred Payment is due by credit card or automatic debit | Due if you do not comply with payment and Restaurant-specific physical de-branding obligations within 14 business days after Agreement expires or is terminated. |
Source: Item 7 — **ESTIMATED INITIAL INVESTMENT (FDD pages 16–19)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the liquidated brand damages fee of $10,000 is due as incurred. This fee is charged if a franchisee or their owners violate the non-competition restrictions outlined in Items 17(q) and (r) of the FDD.
For a prospective Chesters franchisee, this means that if they or their owners breach the non-competition agreement, they will be required to pay Chesters $10,000. Non-competition agreements are common in franchising to protect the brand and prevent franchisees from opening competing businesses during and after the franchise term within a specified area.
It is important for potential franchisees to carefully review Items 17(q) and (r) in the FDD to fully understand the scope and limitations of the non-competition restrictions. Understanding these restrictions is crucial to avoid inadvertently triggering the liquidated brand damages fee. Franchisees should consult with a legal professional to ensure they fully understand their obligations and the potential financial consequences of violating the non-competition agreement.