Is purchasing new equipment and fixtures for a Chesters Restaurant required or encouraged?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
We encourage you to purchase new equipment and fixtures for the Restaurant. We currently are the designated supplier for certain core equipment, signage, fixtures, and supplies (fryers, breading and batter table, hot display case, landing table, and oil-removal caddy) approved for use in the Restaurant. We currently sell the core equipment, signage, fixtures, and supplies at a bona fide wholesale price we set from time to time based in part on our current cost. If you obtain financing for core equipment, signage, fixtures, and supplies through Ascentium (see Item 10), the purchase price for core equipment, signage, fixtures, and supplies will be our then current bona fide wholesale price plus an additional 5% to 10% of the purchase price, which is roughly equivalent to the amount that Ascentium will deduct from their payment to us for the core equipment, signage, fixtures, and supplies as part of our arrangement to reduce the interest rate for the financing you obtain through Ascentium. See Item 10.
In limited circumstances, however, we may allow you to purchase the core equipment, signage, fixtures, and supplies from another designated supplier. We are also an approved (but not the only) supplier for other equipment and fixtures, which are also available through designated suppliers. While we encourage you to purchase new equipment and fixtures, you can purchase used equipment (which need not be purchased from an approved supplier) if it has been in service for less than 2 years and otherwise meets our quality standards. Besides the items described above, we also currently are an approved (but not the only) supplier of marketing materials. Except for us, in which our officers indirectly owns an interest, one of our officers owns a non-controlling interest in Wynn's Grain and Spice, LLC, which currently manufactures various consumables and sells those items to us for resale to our franchisees (indirectly through unaffiliated third-party distributors and grocery wholesalers).
The cost of food items, ingredients, equipment, furnishings, supplies, materials, and other items may vary among Restaurants. These cost variations are due to your Restaurant's proximity to the supplier's distribution center, the number of deliveries scheduled to your area each week, actual transportation costs, and other factors.
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, franchisees are encouraged to purchase new equipment and fixtures for their restaurants. While not explicitly required in all cases, Chesters designates itself as the supplier for certain core equipment, signage, fixtures, and supplies, including fryers, breading and batter tables, hot display cases, landing tables, and oil-removal caddies.
While Chesters encourages new equipment purchases, franchisees have the option to purchase used equipment, provided it has been in service for less than two years and meets Chesters's quality standards. This provides some flexibility for franchisees looking to manage initial investment costs. However, Chesters retains the right to modify restaurant standards, including those related to equipment, fixtures, and design, and franchisees must comply with these modifications within a specified timeframe.
Chesters also has the right to restrict the sources of trade secret and proprietary food products to protect trade secrets, assure quality, ensure a reliable supply of products, achieve better purchase and delivery terms, control the use of trademarks, and monitor the manufacture, packaging, processing, and sale of these items. During 2024, Chesters received $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 Chesters sold certain equipment and proprietary food products for resale to its franchisees. This revenue represented 91.97% of Chesters's total revenue of $40,358,110.
The FDD states that the cost of purchases from designated or approved suppliers will be approximately 70% to 95% of the total cost to establish a Chesters restaurant, and approximately 20% to 40% of the total annual cost to operate the restaurant. Franchisees should be aware that Chesters has no obligation to approve alternative or additional suppliers for any products and will not consider requests to buy from unapproved suppliers any product used at or sold from the restaurant.