What are the potential consequences for a Chesters franchisee who fails to meet the restaurant build-out requirements (Item 8), considering the lack of financing assistance (Item 10)?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
Restaurant Build-Out. You must develop the Restaurant in compliance with our System and ensure that all plans and specifications comply with our requirements, applicable laws, and lease requirements. We will give you required and recommended specifications and layouts for a CHESTER'S Restaurant. You must give us, and we have the right to review and approve, all plans and specifications before you begin constructing the Restaurant.
Before you open your Restaurant, we will conduct a restaurant-readiness review assessment at no additional charge to you. However, if we determine that your Restaurant does not pass the assessment and we must reassess the Restaurant multiple times, we have the right to
charge you our costs and expenses. We currently estimate this cost to be approximately $1,000 per assessment. This payment is not refundable.
Financing for Core Equipment, Signage, Fixtures, and Supplies
As detailed in Item 10, we have a program with a third-party equipment lender, Ascentium Capital, a division of Regions Bank ("Ascentium"), to finance the purchase price for certain of the core equipment, signage, fixtures, and supplies you will need for your Restaurant. You will not pay us any monies or fees directly, but Ascentium will pay us the financed amount for the purchased core equipment, signage, fixtures, and supplies you will need for your Restaurant.
We have the right to charge you $1,000 per day for any additional training we deem necessary if and after the Restaurant fails an inspection, including not being prepared for a training, in Chester's sole discretion, despite indicating otherwise.
If you cancel your order for various equipment, signage, fixtures, and product inventory within 3 weeks from the estimated shipping date, or after some or all of the products are received by Chester's, then we may charge you a product cancellation fee equal to 10% of the total amount that is canceled. If you return any equipment, signage, fixtures, or product inventory to us any time, then we may charge you a restocking fee equal to 20% of the total amount that is returned, plus any freight cost we incur on your behalf.
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, franchisees must develop their restaurants in compliance with Chesters's system, ensuring all plans and specifications meet Chesters's requirements, applicable laws, and lease requirements. Chesters will provide required and recommended specifications and layouts, and franchisees must submit all plans for approval before construction. Failure to meet these build-out requirements can lead to delays in opening, additional assessments, and potential penalties.
Chesters conducts a restaurant-readiness review before opening at no additional charge. However, if the restaurant fails this assessment, Chesters has the right to charge the franchisee for reassessments, estimated to cost approximately $1,000 per assessment. This cost is non-refundable. Additionally, if a Chesters restaurant fails an inspection, including not being prepared for training, Chesters can charge $1,000 per day for any additional training deemed necessary.
While Chesters does offer a financing program with Ascentium Capital for core equipment, signage, fixtures, and supplies, this program does not cover the entire build-out costs. The franchisee is responsible for securing financing for the remaining build-out expenses. Failure to secure adequate financing and meet the build-out requirements could result in the franchisee not being able to open the restaurant, leading to potential loss of initial fees and investments. Furthermore, Chesters retains the right to charge a product cancellation fee of 10% or a restocking fee of 20% plus freight costs for cancelled or returned items, adding to the financial burden if the build-out is not completed successfully.