According to the Chesters EFA, what is the significance of the Prepayment Addendum?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
You may prepay this EFA only in accordance with the Prepayment Addendum referencing the Agreement No. above, which is made a part hereof.
This Prepayment Addendum ("Addendum") sets forth your right to prepay the transaction evidenced by the agreement identified above ("Agreement"). Capitalized terms used, but not defined, in this Addendum shall have the meaning set forth in the Agreement.
Provided no default under the Agreement has occurred and is continuing as of the Prepayment Date (as defined below), you may prepay the Agreement, in whole but not in part, on any business day by paying Ascentium the "Unpaid Balance" in immediately available funds.
The Unpaid Balance shall equal, as of the date of the receipt by Ascentium of the Unpaid Balance (such date, the "Prepayment Date"), the sum of (i) the Principal Balance (defined below) plus (ii) any Additional Amounts (defined below) due under the Agreement:
"Principal Balance" means an amount equal to the sum all unpaid Payments due and to become due under the Agreement with all future Payments discounted to their present value using a per annum discount rate equal to the lower of (i) the interest rate set forth in the Agreement or (ii) 3%.
"Additional Amounts" means (i) all other amounts (excluding Payments) due and owing under the Agreement as of the Prepayment Date, (ii) all known tax and insurance payments, if any, that we expect to pay on your behalf under the Agreement after the Prepayment Date but attributable to the period prior to the Prepayment Date, and (iii) all applicable taxes, if any, arising out of the prepayment.
Ascentium shall specify the Unpaid Balance which, absent manifest error, shall be binding and conclusive. Your prepayment pursuant to this Addendum does not release you from your indemnity obligations or your obligation to reimburse us for any taxes, insurance or other expenses we pay on your behalf under the Agreement after the Prepayment Date that were not included in the Unpaid Balance calculation.
If you desire to prepay the Agreement in full, please contact Ascentium at customerservice@ascentiumcapital.com or 866-846-3646 to receive your current Unpaid Balance.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, the Prepayment Addendum is a crucial component of the Equipment Finance Agreement (EFA) that outlines the franchisee's rights and conditions for prepaying the agreement. The EFA states that a franchisee may only prepay the EFA in accordance with the Prepayment Addendum, which references the specific Agreement Number. This addendum is considered part of the overall agreement, meaning its terms are legally binding.
The Prepayment Addendum specifies that if there is no existing default under the Agreement, the franchisee has the option to prepay the Agreement in its entirety, but not partially, on any business day. To do so, the franchisee must pay Ascentium Capital the "Unpaid Balance" using immediately available funds. The Unpaid Balance is calculated as the sum of the Principal Balance and any Additional Amounts due under the Agreement as of the Prepayment Date.
The Principal Balance is defined as the sum of all unpaid Payments due and to become due, discounted to their present value using a per annum discount rate. This discount rate is the lower of either the interest rate set forth in the Agreement or 3%. Additional Amounts include all other amounts owed under the Agreement as of the Prepayment Date, any known tax and insurance payments Ascentium expects to pay on the franchisee's behalf after the Prepayment Date but attributable to the period prior to it, and all applicable taxes arising out of the prepayment. To obtain the current Unpaid Balance, a franchisee must contact Ascentium Capital via email or phone. Prepayment does not release the franchisee from indemnity obligations or the responsibility to reimburse Ascentium for taxes, insurance, or other expenses paid on their behalf after the Prepayment Date that were not included in the Unpaid Balance calculation.