Under what conditions can Chesters require franchisees to buy items from designated exclusive sources?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 5 — INITIAL FEES (FDD pages 13–14)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, Chesters has the right to mandate that franchisees acquire trade secret or proprietary food products and other branded items exclusively from Chesters, its affiliates, or other specified sources. This condition is in effect during the entire franchise term, and the prices are determined by Chesters and these designated sources.
Chesters can restrict the sources of these items to protect trade secrets, ensure quality, guarantee a reliable supply of products meeting their standards, secure better purchase and delivery terms, control the use of their trademarks by third parties, and monitor the manufacture, packaging, processing, and sale of these items. These proprietary items include seasonings, specially-formulated pre-prepared mixes (like breading, batter dip, and marinades), sauces, branded fresh and frozen poultry products, frozen potato wedges, and paper products (such as packaging, napkins, and cups).
Chesters licenses its trademarks to certain unaffiliated suppliers who produce and brand these proprietary goods. These suppliers then sell the goods to Chesters' designated distributors, from whom franchisees are required to purchase them. This system allows Chesters to maintain tight control over product quality and brand consistency, but it also means franchisees have limited flexibility in sourcing these essential items and must accept the pricing set by Chesters and its approved suppliers. Franchisees should be aware that Chesters also has the right to revoke approval of particular products or suppliers if they no longer meet the company's standards, requiring franchisees to immediately cease purchasing from those sources.