If the collateral is damaged, what are my obligations to Chesters?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
change the location of the Collateral without our advance written consent. You are responsible for installing and keeping the Collateral in good working order. You shall not make any alterations, additions or improvements to the Collateral which detracts from its economic value or functional utility. If the Collateral is damaged or lost, you agree to continue making scheduled Payments unless we have received the Casualty Value pursuant to Section 11. You agree to keep the Collateral insured against loss during the Term and to have us named as loss payee in such coverage amounts as we may specify from time to time, from an insurer who is acceptable to us. You agree to provide us with a certificate of insurance acceptable to us upon our request. If you do not provide such certificate then we will have the right, but not the obligation, to have such insurance placed for the Term in such form and amount as we deem reasonable to protect our interests. You understand and agree that (i) such insurance will name us, and not you, as the insured (therefore, such insurance will be for our sole benefit and not for your benefit) and (ii) your monthly payment pursuant to this EFA shall include a charge equal to (A) our premium expense for such insurance, which may be higher than the premium you would pay if you placed such insurance independently, plus (B) an annualized finance charge not to exceed 15% on our premium expense, plus (C) fees for billing and other administrative services with respect to such insurance in an amount not to exceed $7.00 per month.
-
- Taxes and Fees;
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, if the collateral is damaged or lost, the franchisee is obligated to continue making scheduled payments, unless Chesters has received the Casualty Value. The franchisee is responsible for insuring the collateral against loss during the term, naming Chesters as the loss payee in the coverage. Chesters specifies the coverage amounts and the insurer must be acceptable to them. The franchisee must provide Chesters with a certificate of insurance upon request.
The franchisee assumes the entire risk of loss, theft, damage, or destruction of the collateral from any cause. Such loss, theft, damage, or destruction does not relieve the franchisee of the obligation to make payments or fulfill any other obligations under the EFA (Equipment Financing Agreement). The franchisee must promptly notify Chesters in writing of any such loss, theft, damage, or destruction.
If damage occurs to any item of collateral, Chesters has the option to have the franchisee, at the franchisee's expense, either place the collateral in good repair, condition, or working order, or if the collateral cannot be repaired or is lost, stolen, or suffers a constructive loss under an insurance policy, pay Chesters the "Casualty Value." The Casualty Value is equal to the total of accrued and unpaid amounts then due and owing, and the remaining future payments discounted to present value at 3%, as of the date the Casualty Value is received by Chesters. Chesters also states that the franchisee is responsible for any damage or destruction of the collateral and will at Chesters' election repair the Collateral at the franchisee's expense or pay to Chesters all amounts then due and owing plus the total of all unpaid future Payments discounted at 3%.