What is the relationship between the training fee for a Chesters franchise described in Item 5 and the pre-opening purchases/leases obligations mentioned in Item 9?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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You must pay us a $3,500 training fee in a lump sum when you sign the Agreement. The training fee is not refundable under any circumstances. During the 2024 fiscal year, the training fees we received from franchisees ranged from $0 to $3,500.
Besides paying the training fee, you must buy various equipment, signage, fixtures, and product inventory before you open your Restaurant. The cost of all items available from us will depend on the Restaurant's anticipated venue and the items already in place. The expected range is $12,000 to $55,000 for a Restaurant to be located in a convenience store or similar retail business. You must have the core equipment to bread, fry, and merchandise CHESTER'S menu items. You may buy this equipment from us or use existing equipment we approve. You may buy certain proprietary food products and preparation supplies from unaffiliated suppliers. However, as described in Item 8, we have the right to require you to buy some or all of these items from designated exclusive sources, including us. None of the amounts you pay to us for any special order equipment is returnable and refundable, unless approved in advance by us. Special order equipment includes electric and/or gas powered cooking or food holding equipment, any custom signage, and other custom marketing materials. All other amounts paid to us for various equipment, signage, fixtures, and product inventory are refundable to you.
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.
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, Item 5 details the initial fees, including a $3,500 training fee due upon signing the Franchise Agreement. This fee is non-refundable. In 2024, the training fees Chesters received from franchisees ranged from $0 to $3,500. Item 9 outlines the franchisee's obligations, referencing Item 5 regarding fees and Items 5, 7, and 8 regarding pre-opening purchases and leases.
In addition to the training fee, franchisees must purchase equipment, signage, fixtures, and product inventory before opening their Chesters restaurant. The cost for these items, if purchased from Chesters, ranges from $12,000 to $55,000 for a restaurant located in a convenience store or similar retail business. Franchisees must acquire core equipment for breading, frying, and merchandising Chesters menu items, which can be purchased from Chesters or, with approval, use existing equipment. Certain proprietary food products and preparation supplies may be bought from unaffiliated suppliers, but Chesters retains the right to mandate purchases from exclusive sources, including themselves.
Item 5 also specifies that amounts paid to Chesters for special order equipment, such as electric or gas-powered cooking equipment, custom signage, and custom marketing materials, are non-refundable unless Chesters approves a refund in advance. However, amounts paid for other equipment, signage, fixtures, and product inventory are refundable. Item 9 lists 'Pre-opening purchases/leases' as an obligation of the franchisee, with reference to sections 5, 6, 8, 9, 10, and 16 of the franchise agreement and Items 5, 7, and 8 of the FDD. This indicates that the franchisee is obligated to make necessary purchases and leases to prepare the restaurant for opening, as detailed in the referenced sections.