According to the Chesters EFA, what is the secured party disclaiming?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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- DISCLAIMER OF WARRANTIES AND CLAIMS; LIMITATION OF REMEDIES: THERE ARE NO WARRANTIES BY OR ON BEHALF OF SECURED PARTY AND NEITHER THE SUPPLIER NOR ANY OTHER PARTY IS SECURED PARTY'S AGENT.
DEBTOR ACKNOWLEDGES AND AGREES: (A) DEBTOR SELECTED THE SUPPLIER, THE COLLATERAL AND ANY SOFT COSTS, (B) SECURED PARTY MAKES NO WARRANTIES WHETHER EXPRESS OR IMPLIED AS TO THE CONDITION OF THE COLLATERAL, ITS MERCHANTABILITY, ITS FITNESS FOR ANY PARTICULAR PURPOSE; (C) DEBTOR ACCEPTS THE COLLATERAL "AS IS" AND WITH ALL FAULTS; (D) DEBTOR AGREES THAT THE COLLATERAL WILL BE USED SOLELY FOR COMMERCIAL OR BUSINESS PURPOSES; (E) IF THE COLLATERAL OR THE SOFT COSTS ARE UNSATISFACTORY FOR ANY REASON OR IF THE SUPPLIER FAILS TO DELIVER ALL OR ANY PART OF THE COLLATERAL OR SOFT COSTS TO DEBTOR, DEBTOR'S ONLY REMEDY, IF ANY, SHALL BE AGAINST THE SUPPLIER OR MANUFACTURER OF THE COLLATERAL AND SOFT COSTS AND NOT AGAINST SECURED PARTY; (F) DEBTOR SHALL HAVE NO REMEDY FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE OF THE SEMPLARY DAMAGES AGAINST SECURED PARTY, ALL OF THE SAME BEING DISCLAIMED AND WAIVED; AND (G) NO DEFECT, DAMAGE OR UNFITNESS OF THE COLLATERAL OR SOFT COSTS NOR ANY FAILURE OF THE SUPPLIER TO DELIVER THE COLLATERAL OR SOFT COSTS TO DEBTOR SHALL RELIEVE DEBTOR OF THE OBLIGATION TO MAKE PAYMENTS OR RELIEVE DEBTOR OF ANY OTHER OBLIGATION UNDER THIS EFA.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, specifically the Equipment Finance Agreement (EFA), the secured party disclaims all warranties, express or implied, regarding the collateral's condition, merchantability, or fitness for any particular purpose. This means Chesters, as the secured party, does not guarantee the equipment's quality or suitability. The franchisee, referred to as the debtor, acknowledges selecting the supplier and collateral and accepts it "AS IS" and with all faults.
Furthermore, the secured party disclaims liability for any consequential, incidental, special, punitive, or exemplary damages. This limitation of remedies means that if the equipment is unsatisfactory or the supplier fails to deliver, the franchisee's only recourse is against the supplier or manufacturer, not Chesters. The franchisee remains obligated to make payments under the EFA regardless of any defects, damage, or unfitness of the collateral or any failure of the supplier to deliver.
In practical terms, this disclaimer places significant risk on the Chesters franchisee. They are responsible for ensuring the equipment meets their needs and for resolving any issues directly with the supplier. The franchisee should conduct thorough due diligence on the supplier and the equipment before entering into the EFA. This is a common practice in franchise agreements where a third party is involved in financing or supplying equipment, as it clarifies the responsibilities and liabilities of each party involved.