Are there any exceptions to the requirement that Chesters franchisees buy from approved suppliers?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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You must buy all food items, ingredients, equipment, furnishings, supplies, materials, and other items used or offered for sale at the Restaurant only from suppliers (including manufacturers, distributors, and other sources) that satisfy our then-current standards and specifications; possess adequate quality controls and capacity to supply your needs promptly and reliably; and have received our approval. With respect to our and our affiliates' trade-secret or proprietary food products and other branded items, we have the right to limit suppliers to us, our affiliates, and/or other specified exclusive sources, in which case you must acquire those trade secret or proprietary food products and other branded items during the franchise term only from us, our affiliates, and/or the other specified exclusive sources at the prices we and they decide to charge. We have the right to restrict your 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 our 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.
We license 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 our designated distributors, and you must purchase the Proprietary Goods from one or more of our designated distributors.
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.
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 generally required to purchase all food items, ingredients, equipment, furnishings, supplies, materials, and other items from approved suppliers. However, there are a few exceptions to this rule.
First, while Chesters encourages franchisees to purchase new equipment and fixtures, franchisees 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 Chesters's quality standards. Second, in limited circumstances, Chesters may allow franchisees to purchase core equipment, signage, fixtures, and supplies from another designated supplier. Chesters is also an approved (but not the only) supplier for other equipment and fixtures, which are also available through designated suppliers.
Chesters also designates itself as the supplier for certain core equipment, signage, fixtures, and supplies (fryers, breading and batter table, hot display case, landing table, and oil-removal caddy). If a franchisee obtains financing for these items through Ascentium, the purchase price will include an additional 5% to 10% of the wholesale price.
It is important for prospective franchisees to understand these exceptions and conditions, as the cost of purchases from designated or approved suppliers is estimated to be approximately 70% to 95% of the total cost to establish the restaurant, and approximately 20% to 30% of the total annual cost to operate the restaurant.