According to the Chesters EFA, what should I do if the collateral is stolen?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
You shall promptly notify us in writing of such loss, theft, damage or destruction.
If damage of any kind occurs to any item of Collateral, you, at our option, shall at your expense (a) place the Collateral in good repair, condition or working order, or (b) if the Collateral cannot be repaired or is lost, stolen or suffers a constructive loss under an insurance policy covering the Collateral, pay to us the "Casualty Value." The Casualty Value will be equal to the total of (i) accrued and unpaid amounts then due and owing, and (ii) the remaining future Payments discounted to present value at 3%, in both cases as of the date the Casualty Value is received by us.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, specifically the Equipment Finance Agreement (EFA), if the collateral is stolen, you must promptly notify Chesters in writing. You are responsible for the risk of loss or theft of the collateral, and such events do not relieve you of your payment obligations under the EFA.
If the collateral is lost or stolen, you may be required, at Chesters' option, to pay the "Casualty Value." This value is calculated as the sum of any accrued and unpaid amounts due, plus the remaining future payments, discounted to present value at a rate of 3%. This means you could be responsible for the remaining balance of the equipment's cost, even if it is stolen.
Furthermore, you are obligated to maintain insurance on the collateral against loss, with Chesters named as the loss payee. This insurance coverage is intended to protect Chesters' financial interest in the collateral. Therefore, in the event of theft, you would also need to file a claim with your insurance company. The insurance proceeds would likely be used to cover the Casualty Value owed to Chesters, mitigating your out-of-pocket expenses.