What is the Chesters franchisee's responsibility regarding the granting of a security interest under the UCC?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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Franchimp
liability to us or Supplier, and/or pursue any of the remedies available to us under the UCC or any other law. In the event we seek to take possession of any part of waive to the fullest extent permitted by law any bonds, surety or security required by statute, court rule or otherwise as an incident of such possession. You agree to pay our reasonable attorneys' fees and actual costs incurred by us in enforcing and defending our rights and interests hereunder including repossession, storage, refurbishment and sale of the Collateral and collection costs, and all non-sufficient funds charges and similar charges. If any part of a payment is late, you agree to pay us upon our demand the following, or if less, the maximum amount allowed under applicable law: (x) a late charge equal to 10% of the payment, (y) a charge of $30.00 for each check returned or if any ACH debit charge is not honored for any reason, and (z) if we have had to perform collection activities in connection with such late payment, our specified collection charges then in effect. The foregoing will not be construed as interest but as reimbursement to us to cover administrative and overhead expenses related to the processing and collection of the late payment.
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- Assignment; Inspection: YOU HAVE NO RIGHT TO SELL, TRANSFER, ASSIGN, LEASE OR ENCUMBER THE COLLATERAL OR THIS EFA. We may sell, transfer, assign or encumber this EFA, in whole or in part, without notice to you or your consent. You agree that if we sell, transfer, assign or encumber this EFA, the assignee will have the rights and benefits that we assign to the assignee and will not have to perform any of our obligations. You agree that the rights of
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, franchisees are restricted from selling, transferring, assigning, leasing, or encumbering collateral or the Equipment Finance Agreement (EFA). Chesters retains the right to sell, transfer, assign, or encumber the EFA without needing to notify the franchisee or obtain their consent. If Chesters does assign the EFA, the assignee will inherit Chesters's rights and benefits without having to fulfill Chesters's obligations. The rights of the assignee will not be subject to any claims, defenses, or set-offs that the franchisee may have against Chesters. Chesters, along with its agents and representatives, has the right to inspect the collateral during regular business hours and access its location for that purpose.
If a franchisee is late on a payment, they must pay Chesters upon demand a late charge equal to 10% of the payment, a charge of $30.00 for each returned check or dishonored ACH debit charge, and Chesters's specified collection charges if collection activities were necessary. These charges are considered reimbursement for administrative and overhead expenses related to processing and collecting the late payment, not as interest.
In the event Chesters seeks to take possession of any part of the collateral, the franchisee agrees to waive any bonds, surety, or security required by statute, court rule, or otherwise as an incident of such possession to the fullest extent permitted by law. The franchisee is also responsible for paying Chesters's reasonable attorneys' fees and actual costs incurred in enforcing and defending their rights and interests, including repossession, storage, refurbishment, and sale of the collateral, collection costs, and non-sufficient funds charges.