What is the Chesters franchisee's obligation regarding the borrowing of the financed amount?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
"us" or "our") agrees to lend to you and you agree to borrow from us the Financed Amount set forth above for the financing of the Collateral and any shipping, installation, training, taxes, fees and other soft costs that we have approved for financing under this EFA (together, the "Soft Costs"). You irrevocably instruct us to pay the Supplier on your behalf, which payment is the funding of our loan to you. The Financed Amount is based upon the total estimated cost of the Collateral and financed Soft Costs (adjusted for any non-reimbursed down payments made by you) (the "Estimated Cost"), which Estimated Cost you and/or the Supplier have provided to us. If the final actual cost of the Collateral and any financed Soft Costs (the "Actual Cost") is different than the Estimated Cost, you authorize us to adjust the Financed Amount to the Actual Cost. If we request, you agree to execute a document reflecting such adjustments and we will provide you with evidence of our cost changes requiring such adjustments if you request. You represent and warrant to us that all information conveyed to us in connection with this EFA whether by you, a guarantor, a Supplier or any other person, is true, accurate, complete and not misleading. Payments. You agree to pay us: (a) the number of payments in the amount(s) shown above (each a "Payment") plus (b) a pro-rated payment equal to 1/30th of a standard Payment times the number of days from the first funding date of the loan (the "Commencement Date") to the first monthly due date specified by us (the "First Due Date"). The interest rate stated above excludes this pro-rated payment and all fees. The pro-rated payment is due on the First Due Date, and the first Payment is due either in advance, on the First Due Date, or on the second Due Date, as specified by us. Subsequent Payments are due on the same day of each month thereafter (the period from the Commencement Date until full payment of your obligations, the "Term"). All payments are due whether or not we invoice you. You authorize us to adjust the Payment amount to maintain the same interest rate stated above if the Financed Amount changes. Any amount not paid when due is subject to a late charge of the lower of 10% of such amount or the highest amount allowed by law. Any returned check and any ACH debit that is not honored is subject to a $30 return fee. Amounts received under this EFA shall be applied to amounts owed as we determine. You may prepay this EFA only in accordance with the Prepayment Addendum referencing the Agreement No. above, which is made a part hereof. Security Interest. You hereby grant to us a security interest in the Collateral and all proceeds to secure all your obligations under this EFA. You irrevocably grant us the right to make such
Obligations Absolute. We make no representation or warranty as to any matter whatsoever including the merchantability or fitness for a particular purpose of the Collateral. This EFA is irrevocable. Your obligation to pay all amounts due hereunder is absolute and unconditional and will not be subject to any reduction, setoff, defense, counterclaim, deferment or recoupment for any reason, including without limitation any defect, damage or unfitness of the Collateral or Soft Costs or the Supplier's failure to deliver the Collateral or Soft Costs. You acknowledge you selected the Supplier, the Collateral and any Soft Costs and the Supplier is not our agent nor are we their agent. If the Collateral or any Soft Costs are unsatisfactory for any reason or are not delivered, your only remedy, if any, shall be against the Supplier and not against us.
filings under the Uniform Commercial Code as we deem necessary.
Collateral. You will use the Collateral for commercial purposes only and in compliance with law. You will not sell, transfer, or lease the Collateral or allow it to be used by anyone other than you. At your expense, you will maintain the Collateral in good operating condition and repair and keep it free and clear from all liens and encumbrances. Titled Collateral will be titled and/or registered as we direct.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the franchisee has several obligations regarding the financed amount. Chesters will pay the supplier on the franchisee's behalf, which constitutes funding the loan to the franchisee. The financed amount is based on the estimated cost of collateral and financed soft costs, adjusted for any down payments made by the franchisee. If the actual cost differs from the estimated cost, Chesters is authorized to adjust the financed amount accordingly. The franchisee agrees to execute documents reflecting these adjustments if requested and Chesters will provide evidence of cost changes.
The franchisee is obligated to grant Chesters a security interest in the collateral under the Uniform Commercial Code to secure the payment and performance of their obligations. All payments received by Chesters from the franchisee will be applied towards the franchisee's obligations as determined by Chesters. The franchisee must make a specified number of payments in the amounts outlined in the agreement, along with a pro-rated payment covering the period from the loan's funding date to the first monthly due date. The interest rate does not include this pro-rated payment or any fees.
Subsequent payments are due on the same day of each month throughout the term of the agreement. The franchisee is also responsible for paying any other amounts due as specified in the agreement. The franchisee's obligation to make payments and pay other amounts due is absolute and unconditional, not subject to abatement, reduction, or set-off for any reason. The agreement is non-cancelable. Chesters is authorized to adjust the payment amount to maintain the same interest rate if the financed amount changes. Late payments are subject to a charge of the lower of 10% or the highest amount allowed by law, and returned checks or dishonored ACH debits incur a $30 return fee.