What is the Chesters franchisee's responsibility 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
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the franchisee plays a crucial role in the financing process. Specifically, the franchisee irrevocably instructs Chesters to pay the supplier on their behalf, which constitutes the funding of the loan to the franchisee. The financed amount is determined by the total estimated cost of the collateral and financed soft costs, adjusted for any down payments the franchisee has made. This "Estimated Cost" is provided to Chesters by either the franchisee or the supplier.
If the final actual cost of the collateral and financed soft costs differs from the initial estimate, the franchisee authorizes Chesters to adjust the financed amount accordingly. Chesters may request the franchisee to execute a document reflecting these adjustments and will provide evidence of the cost changes if requested. Furthermore, the franchisee is responsible for ensuring that all information provided in connection with the Equipment Finance Agreement (EFA) is true, accurate, complete, and not misleading. This responsibility extends to information provided by the franchisee, any guarantor, the supplier, or any other person involved.
In terms of payments, the franchisee agrees to pay the specified number of payments in the amounts shown, along with a pro-rated payment for the period between the loan's first funding date and the first monthly due date. The franchisee also authorizes Chesters to adjust the payment amount to maintain the same interest rate if the financed amount changes. Failure to make timely payments results in a late charge of the lower of 10% of the amount due or the highest amount allowed by law, and any returned check or dishonored ACH debit is subject to a $30 return fee. These terms highlight the franchisee's responsibility to provide accurate cost information, authorize necessary adjustments, and adhere to the payment schedule to avoid penalties and maintain the loan's integrity.