What is the maximum borrowing amount available to Chesters under the revolving loan agreement?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
------| | 2026 | 580,684 | | 2027 | 448,557 | | 2028 | 300,148 | | 2029 | 116,999 $ 1,991,751 | 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 yea
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the company has a revolving loan agreement that allows for maximum borrowings of up to $1,000,000. This loan matures on December 31, 2026. The interest rate is calculated as 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. This indicates that Chesters had the full $1,000,000 available to borrow, if needed, at those times. The agreement also requires Chesters to comply with certain financial and nonfinancial covenants.
Chesters' management believed they were in compliance with all covenants as of December 31, 2024. However, the company 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. This information is relevant to a prospective franchisee because it provides insight into the financial health and borrowing capacity of Chesters, which could impact the franchisor's ability to support its franchisees.