B62/100FDD 2024
Chester’s — Litigation & Risk
Food & Beverage - Full Service · FDD Items 3, 4 & 5
Lower Risk
No litigation cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
62 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.
Total 7(a) loans
15
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Not required
You retain the right to sue in court
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
5 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
No
Franchisor can match any purchase offer when you try to sell
Governing law
Alabama
State whose law governs disputes — relevant if you're not based there
What drove the 62/100 rating
Risk Score Breakdown
- 01MEDUnit count declined 7.3% YoY (1002 → ~928 units), indicating system contraction and potential franchisee dissatisfaction
- 02MINORNo financial performance disclosure (Item 19) prevents validation of $27.5K-$296.5K investment returns
- 03MINORZero royalties create misaligned incentives—franchisor has minimal ongoing interest in franchisee success
- 04MINORUnprotected territory exposes franchisees to internal competition from other Chester's locations
- 05MINORWide investment range ($27.5K-$296.5K spread) suggests inconsistent unit economics or multiple failing models
- 06HIGHNo going concern statement absent—typical red flag for mature/declining QSR franchises
- 07MINORLow franchise fee ($3,500) combined with declining units suggests potential predatory recruitment model
Severity inferred from FDD text — not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.