Detailed Estimates of Chester’s Franchise Costs Based on Item 7 (Estimated Initial Investment) of Chester’s 2017 Franchise Disclosure Document

Restaurant-In-Store Franchise Operated in a Convenience Store or Similar Retail Business (Other Than a Supermarket) and Chester’s Restaurants Operated at a Food Court, Strip Mall, or Other Non-Traditional Location (Such as a Sports Arena or Stadium)

• Because the initial brand standard training program occurs at your Restaurant, Chester’s does not anticipate that your trainees will incur any travel, lodging, or living expenses while attending the initial brand standard training program.

1.  Start-Up Fee:  $3,500

2.  Insurance:  $0 to $10,000

• The figures in the chart estimate your insurance costs during the first 3 months of operation. You might need to pay the entire annual premium in advance.

• Costs might vary among underwriters and be based on how long you have been in business, your financial condition, your prior risks, and Restaurant location.

3.  Rent and Security Deposit:  varies

• All Restaurant-in-Store franchises will be located within your existing space, so in that case you should have no significant additional rent/lease obligations unless you pay percentage rent.

• For a Chester’s Restaurant at a food court, strip mall, or other non-traditional locations (such as a sports arena or stadium), Chester’s assumes that you will lease the building or space for the Restaurant. However, if you currently own the building in which the Restaurant will be located, you should incur no rental costs.

• While Chester’s anticipates that the average in-line/food court Restaurant size will be 1,200 square feet, your Restaurant’s size will depend on the location you choose.

• If you lease space from a third-party landlord, your monthly rent will depend on the location, the demand for the location among prospective lessees, general rental rates in that geographic area, whether the landlord adds tenant build-out allowances into the rent, and similar factors.

• You might have to pay base rent and percentage rent based on Restaurant gross sales.

• If utilities, taxes, and insurance are included in rent, then the rent also might increase.

• You also should expect to pay a security deposit equal to 1 or 2 months’ rent.

4.  Build-Out Cost:  $0 to $200,000

• If you operate a Restaurant-in-Store other than in a supermarket under the Chester’s Mark, this figure assumes the Restaurant will have 600 square feet.

• If you operate a Chester’s Restaurant at a food court or strip mall location, this figure assumes that the Restaurant will have 1,200 square feet.

• The costs to build out an existing facility for your Restaurant depends on whether an existing food or deli-type facility is being converted, whether a drive-thru window is being added, the Restaurant’s square footage and dimensions, whether seating is added, kitchen size, adequate hood systems and HVAC (heating, ventilation, and air conditioning), and other factors.

• If you operate under the Chester’s Mark in a supermarket, this figure assumes you have an existing deli-type facility and are capable of serving hot foods.

5.  Equipment, Furniture, Signage, and Fixtures:  $8,700 to $55,100

• If you operate under the Chester’s Mark, you must buy or lease certain equipment, including kitchen and serving line equipment, a decor package, refrigeration and installation, point-of-sale materials, a safe, menu boards, miscellaneous small wares, and signage.

• The Restaurant’s equipment package depends on the presence of existing food service or deli-type facilities, square footage and anticipated volumes, the menu format, and whether a drive-thru window is being added.

• Giles, the franchisor’s former affiliate, manufactures the required fryers, breading and batter table, hot cases, landing table, and oil removal caddy. As of the 2017 Disclosure Document’s issuance date, you may purchase these items from Chester’s or an unaffiliated third party food service equipment supplier. However, Chester’s may require you to buy these items from specified exclusive sources (including Chester’s or its affiliates) at the prices the source decides to charge.

• Chester’s provides a list of approved suppliers from whom you can purchase furnishings, fixtures, signage, and equipment.

6.  Initial Inventory:  $2,000 to $9,000

• Chester’s estimates that the range given will cover initial product inventory and cleaning, office, and general supplies to open the Restaurant.

• You currently must purchase required breading, marinades, and paper products. Chester’s is the primary supplier of these products, which are manufactured specially for the Chester’s System, and sells these proprietary items to unaffiliated suppliers who then resell them to Chester’s franchisees.

• Chester’s licenses certain suppliers to prepare breading and marinades using its proprietary formulas. As of the 2017 Disclosure Document’s issuance date, you may purchase these items from Chester’s or from an unaffiliated third party supplier. However, Chester’s may require you to buy these items from specified exclusive sources (including Chester’s or its affiliates) at the prices the source decides to charge.

7.  Grand Opening Advertising:  $0 to $4,000

8.  Additional Funds (3 months):  $10,000 to $15,000

• This estimates the funds needed to cover your initial expenses for the first 3 months of operation (other than the items identified separately in the table). It includes payroll costs but not any draw or salary for you. However, this is only an estimate, and it is possible you will need additional working capital during the first 3 months you operate your Restaurant and for a longer time period after that.

9.  Total (excluding real estate lease and purchase costs):  $24,200 to $296,600

Restaurant-in-Store Franchise Operated in a Supermarket

• The total estimated initial investment necessary to begin operation of a Chester’s Restaurant-in-Store franchise in a supermarket ranges from $12,000 to $251,900.