Is the Chesters Equipment Finance Agreement (EFA) cancelable?

According to Chesters's 2025 Franchise Disclosure Document, the Equipment Finance Agreement (EFA) is explicitly stated as non-cancelable. The document emphasizes that the franchisee's obligation to make payments and fulfill other financial responsibilities is absolute and unconditional, regardless of any potential issues or disputes. This means a franchisee cannot simply terminate the agreement if they encounter financial difficulties or are dissatisfied with the equipment.

This non-cancelable clause has significant implications for prospective Chesters franchisees. It underscores the importance of carefully evaluating the financial commitment and the suitability of the financed equipment before entering into the EFA. Franchisees should conduct thorough due diligence to ensure they can meet the payment obligations throughout the term of the agreement.

While the franchisee cannot cancel the EFA, Chesters retains certain termination rights under specific conditions. Chesters can terminate the agreement if the franchisee fails to comply with any provision of the EFA or any other agreement with Chesters and does not correct the failure within twenty days after receiving notice of default. If the default is non-curable, Chesters can terminate the agreement immediately without any opportunity to cure. Additionally, Chesters can terminate the agreement immediately if the franchisee transfers their controlling ownership interest or sells substantially all of their assets without prior approval.

Given the non-cancelable nature of the EFA, prospective Chesters franchisees should seek legal and financial advice to fully understand their obligations and potential risks before signing the agreement. They should also inquire about any prepayment options available, as mentioned in the Prepayment Addendum, to potentially mitigate the long-term financial burden.