According to the Chesters EFA, what is the nature of Chesters' obligation to make payments?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
YOUR OBLIGATION TO MAKE PAYMENTS AND PAY OTHER AMOUNTS DUE HEREUNDER IS ABSOLUTE AND UNCONDITIONAL AND NOT SUBJECT TO ABATEMENT, REDUCTION OR SET-OFF FOR ANY REASON WHATSOEVER.
THIS IS A NON-CANCELABLE AGREEMENT.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, specifically Item 23 concerning receipts related to the Equipment Finance Agreement (EFA), a franchisee's obligation to make payments is absolute and unconditional. This means that the franchisee must make all payments due under the EFA without any reduction, abatement, or set-off, regardless of the circumstances. This obligation remains in effect for the entire term of the agreement.
Chesters emphasizes that this is a non-cancelable agreement, highlighting the franchisee's commitment to fulfilling all payment obligations. The terms of the EFA are considered to have been freely negotiated by both parties, further reinforcing the binding nature of the payment obligations. This underscores the importance for potential franchisees to carefully review and understand the terms of the EFA before signing.
Furthermore, the EFA stipulates that the obligation to make payments is not contingent on the condition of the collateral, its fitness for any particular purpose, or the supplier's failure to deliver the collateral. Even if the equipment is defective, damaged, or not delivered, the franchisee is still required to make all payments as scheduled. This allocation of risk places the responsibility for dealing with equipment issues on the franchisee, who must pursue any remedies against the supplier or manufacturer, not against Chesters. Chesters makes no warranties regarding the equipment, and the franchisee acknowledges selecting the supplier and equipment.
In summary, Chesters's EFA establishes a strict and unwavering payment obligation for the franchisee. This arrangement is designed to protect Chesters's financial interests and ensure a steady stream of payments, regardless of any issues that may arise with the equipment or supplier. Prospective franchisees should be fully aware of this absolute payment obligation and carefully consider the potential risks before entering into the EFA.