Who pays the franchise broker for referring prospects or selling a Chesters franchise?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
Advisory Regarding Franchise Brokers. Under the Washington Franchise Investment Protection Act, a "franchise broker" is defined as a person that engages in the business of the offer or sale of franchises.
A franchise broker represents the franchisor and is paid a fee for referring prospects to the franchisor and/or selling the franchise.
If a franchisee is working with a franchise broker, franchisees are advised to carefully evaluate any information provided by the franchise broker about a franchise.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, a franchise broker represents the franchisor and receives payment from the franchisor for referring potential franchisees or for successfully selling a franchise. This arrangement is disclosed specifically within the context of the Washington Franchise Investment Protection Act.
For a prospective Chesters franchisee, this means that if they are working with a franchise broker, the broker is representing Chesters's interests, not the franchisee's. It's crucial to carefully evaluate any information provided by the broker, keeping in mind their allegiance lies with the franchisor. Franchisees should conduct their own independent research and due diligence, verifying any claims made by the broker with Chesters directly and other reliable sources.
This disclosure is particularly relevant in Washington due to specific state regulations, but the principle applies universally: understand who the broker represents and whose interests they are serving. Franchisees should not rely solely on the broker's information but should seek independent legal and financial advice to make an informed decision about investing in a Chesters franchise.