When are Chesters' upfront franchise fees typically billed and paid?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
ents in restaurant management, food preparation, sales promotion and service. The Company has applied the practical expedient retrospectively to all periods presented.
Franchise agreements typically require an upfront franchise fee paid upon opening of a store. Upfront franchise fees are typically billed and paid when a new franchise agreement becomes effective. The Company has determined that the services provided in exchange for upfront franchise fees, which primarily relate to pre-opening support, are distinct from the ongoing services provided to franchisees.
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, upfront franchise fees are typically billed and paid when a new franchise agreement becomes effective. These fees are associated with the opening of a new store. Chesters recognizes these fees as revenue upon the opening of the franchise, acknowledging that the services provided in exchange for these fees primarily relate to pre-opening support.
This billing and payment structure means that prospective Chesters franchisees should be prepared to pay the upfront franchise fee around the time they sign the franchise agreement. This fee is a prerequisite for receiving pre-opening support and ultimately opening the store. The FDD indicates that these fees are non-refundable.
For potential franchisees, understanding the timing of these payments is crucial for financial planning. Knowing that the fee is due when the agreement becomes effective allows franchisees to align their financial resources accordingly. It is also important to note that the recognition of these fees as revenue is tied to the actual opening of the franchise, highlighting the importance of successfully launching the business to both the franchisee and Chesters.