What was the outstanding balance on Chesters' term loan with a 7.25% interest rate in 2023?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
and $145,397, respectively.
6. LONG-TERM DEBT
The Company has a credit agreement (the Agreement), as amended, with a financial institution and has the following outstanding debt:
| 2023 | 2022 |
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Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the outstanding balance on the term loan with a 7.25% interest rate was $1,084,858 in 2023. The note matures in December 2028 and is collateralized by certain business assets.
This information is relevant for prospective franchisees as it provides insight into Chesters's debt obligations and financial health. Understanding the terms of the loan, such as the interest rate and maturity date, can help franchisees assess the financial stability of the franchisor.
The fact that the loan is collateralized by business assets means that in the event of default, the lender has a claim on those assets. While this is a fairly standard lending practice, potential franchisees should consider the implications of Chesters having to pledge its assets as collateral.
Reviewing the long-term debt obligations of a franchisor like Chesters is a standard part of due diligence. It allows potential franchisees to evaluate the franchisor's financial leverage and ability to meet its debt obligations, which can impact the support and services provided to franchisees.