What is the maturity date for Chesters' revolving loan?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 21: **FINANCIAL STATEMENTS]
The Agreement includes a revolving loan for maximum borrowings up to $1,000,000 that matures December 31, 2026. Interest is calculated at the greater of 5% or Prime rate plus 1% (8.5% at December 31, 2024 and 2023) and secured by essentially all business assets. There were no amounts outstanding under the revolving loan as of December 31, 2024 and 2023. The revolving loan matures on December 31, 2026.
As part of the Agreement, the Company is required to comply with financial and nonfinancial covenants. Management believes it was in compliance with all covenants as of December 31, 2024. The Company was not in compliance with certain financial covenants for the year ended December 31, 2023. During 2024, the bank granted a waiver for the noncompliance in 2023.
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, the company has a revolving loan agreement that allows for maximum borrowings up to $1,000,000. This loan matures on December 31, 2026. Interest is calculated at the greater of 5% or the prime rate plus 1%, which was 8.5% as of December 31, 2024 and 2023. The loan is secured by essentially all of Chesters' business assets. As of December 31, 2024 and 2023, there were no outstanding amounts under this revolving loan.
Chesters is required to comply with certain financial and nonfinancial covenants as part of the loan agreement. The company's management believed they were in compliance with all covenants as of December 31, 2024. However, Chesters was not in compliance with certain financial covenants for the year ended December 31, 2023, but the bank granted a waiver for this noncompliance during 2024.
For a prospective franchisee, this information indicates Chesters' access to capital and its financial obligations. The revolving loan provides financial flexibility for Chesters, but the covenants and potential for non-compliance could impact the franchisor's operations and ability to support its franchisees. It is important to note that the franchisor obtained a waiver for non-compliance in 2023, which could be a point of discussion for a potential franchisee to understand the circumstances and potential risks involved.