Does Chesters have a process in place for granting and revoking approval of alternative suppliers?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
Because we currently require you to purchase products only from designated or approved suppliers already established for the CHESTER'S System, or only in compliance with our brand standards and specifications, we will not consider your request to buy from a then-unapproved supplier any product you will use at or sell from the Restaurant. Therefore, we currently have no process in place for granting and revoking approval of alternative suppliers and do not issue any criteria for consideration. We have no intention or obligation to approve alternative or additional suppliers for any products.
You must permit us or our agent at any reasonable time to remove samples of food or non-food items from your Restaurant without payment to determine whether the samples meet our then-current standards and specifications.
Formulae for proprietary seasonings and specially-formulated pre-prepared mixes are not available to you, other franchisees, or non-designated suppliers. Standards and specifications for other food and paper products are not uniformly issued to franchisees but are available for specific products upon a franchisee's written request. We determine the standards and specifications for those food and paper products, sometimes in consultation with suppliers, to assure our desired quality of ingredients, size, flavor, and appearance and our desired quantities for each product. We issue and modify standards and specifications through consumer research and internal product testing.
We have the right to revoke our approval of particular products or suppliers when we determine that those products or suppliers no longer meet our standards. If we notify you that we have revoked approval of a product or supplier, you must stop selling any disapproved products and stop purchasing from any disapproved supplier. We and our affiliates have the right to receive payments from suppliers on account of their actual or prospective dealings with you and other franchisees and to use all amounts received without restriction for any purposes we deem appropriate (unless we and our affiliates agree otherwise with the suppliers). Certain suppliers to our franchisees (who sell directly to franchisees or indirectly through distributors in the supply
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, Chesters currently does not have a process in place for granting approval of alternative suppliers. Chesters requires franchisees to purchase products from designated or approved suppliers already established for the Chesters system, or in compliance with brand standards and specifications. Chesters will not consider requests to buy from unapproved suppliers. However, Chesters does have the right to revoke approval of particular products or suppliers when they determine that those products or suppliers no longer meet their standards. If Chesters notifies a franchisee that they have revoked approval of a product or supplier, the franchisee must stop selling any disapproved products and stop purchasing from any disapproved supplier.
Chesters can restrict sources of trade secret and proprietary food products and other branded items in order to protect trade secrets, assure quality, assure a reliable supply of products that meet their standards, achieve better purchase and delivery terms, control use of the Marks by third parties, and monitor the manufacture, packaging, processing, and sale of these items. Chesters licenses the Marks to certain unaffiliated suppliers to make and brand the proprietary seasonings and specially-formulated pre-prepared mixes (which includes breading, batter dip, and marinades), sauces, branded fresh and frozen poultry products, frozen potato wedges and paper products (which includes packaging, napkins, cups, and other products used in the operation of the Restaurant) (collectively, the "Proprietary Goods"). The suppliers then sell the Proprietary Goods to Chesters's designated distributors, and franchisees must purchase the Proprietary Goods from one or more of Chesters's designated distributors.
Chesters estimates that the cost of purchases from designated or approved suppliers will be approximately 70% to 95% of the total cost to establish, and approximately 20% to 40% of the total annual cost to operate, a Restaurant. During 2024, Chesters received a total of $37,118,501 from direct franchisee purchases of certain equipment and proprietary food products and from purchases by unaffiliated suppliers and grocery wholesalers to whom they sold certain equipment and proprietary food products for resale to their franchisees. That is 91.97% of their total revenue of $40,358,110.
This arrangement means a Chesters franchisee has limited flexibility in sourcing products and must rely on Chesters's approved suppliers. While this ensures consistency and quality control, it may also limit a franchisee's ability to negotiate better prices or take advantage of local market conditions. The franchisee is also obligated to comply with any modifications Chesters makes to its standards for the Restaurant, including those relating to signage, equipment, inventory, fixtures, design, layout, or maintenance.