What obligations does a Chesters franchisee have regarding site selection (Item 9) and how does that relate to the lack of exclusive territory described in Item 12?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Obligation | Section in agreement | Disclosure document item | |
|---|---|---|---|
| a. | Site selection and acquisition/lease | Not Applicable | 11 and 12 |
ITEM 12 TERRITORY
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. You also do not have any type of non-exclusive territory. We and our affiliates have the right at all times during the franchise term to engage in any and all activities we deem appropriate, at any time or place and through any distribution channels we choose (such as the Internet, catalog sales, telemarketing, or other direct marketing sales). We need not pay you any compensation if we solicit or accept orders from any customers, regardless of their location.
Before you open your Restaurant, we (and/or one of our Area Developers) will:
- Give you information about the Restaurant's layout requirements and signs. [Agreement — Section 6]
- Review and approve your plans and specifications for the Restaurant and conduct a restaurant-readiness review assessment. [Agreement — Section 6]
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, franchisees have obligations regarding site selection, as detailed in Item 9. Specifically, the table in Item 9 indicates that site selection and acquisition/lease are franchisee obligations, referencing Items 11 and 12 of the disclosure document and the franchise agreement. This means that franchisees are responsible for finding and securing a location for their Chesters restaurant. Item 11 notes that Chesters will give the franchisee information about the Restaurant's layout requirements and signs and will review and approve the franchisee's plans and specifications for the Restaurant and conduct a restaurant-readiness review assessment.
Item 12 of the FDD clarifies that Chesters franchisees do not receive an exclusive territory. This means that Chesters may establish other franchised or company-operated restaurants, or other distribution channels, that could compete with a franchisee's location. The lack of an exclusive territory is directly related to the franchisee's site selection obligations because the franchisee must consider the potential for competition when choosing a location. Chesters retains the right to engage in any activities it deems appropriate through any distribution channels without compensating the franchisee, regardless of customer location.
For a prospective Chesters franchisee, this means that while they are responsible for finding and securing a site, Chesters provides some guidance and approval in the process. However, the franchisee must be aware that Chesters does not offer exclusive territories, so there is a risk of competition from other Chesters outlets or alternative distribution channels. This lack of territorial protection is a critical factor to consider during site selection, as the franchisee will need to assess the potential for competition and its impact on the restaurant's success. The franchisee should perform thorough market research to identify a location that can thrive despite potential competition from other Chesters locations or alternative distribution methods.