What is the impact on a Chesters franchisee's loan if they breach any agreement with Ascentium?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
eg)
You will be in default under your loan if you fail to make payments in a timely manner; if you or any guarantor become insolvent, file a petition in bankruptcy, make an assignment for the benefit of creditors or admit the inability to pay debts as they become due; if you or any guarantor terminate existence or take any action to cease or wind up your business affairs; you otherwise breach or default under any agreement with Ascentium; or you merge, consolidate with, or sell substantially all of your assets or a majority of your ownership interests to any third party without Ascentium's prior written consent.
If you default, Ascentium may, at its election, accelerate and require that you pay all accrued and unpaid amounts outstanding, and all of the remaining payments due under the financing agreement (discounted to present value at the higher of 3% per annum or the lowest rate allowed by law). Ascentium can also take possession of the collateral, sell it and apply the proceeds against what you owe Ascentium after deducting any costs it incurs. You must also pay Ascentium's costs and expenses, including reasonable attorneys' fees, to enforce the financing agreement. If you make a payment late you must pay Ascentium a late charge of 10% of the payment amount (not to exceed the highest rate allowed by applicable law). Ascentium may charge you a return check or return ACH charge of $30 for any payment which is returned by your bank for any reason (not to exceed the maximum amount permitted by law).
You must insure the collateral, at your cost, against all loss during the term of the loan.
Source: Item 10 — FINANCING (FDD pages 23–24)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, if a franchisee defaults on their Ascentium loan agreement, several consequences may arise. Ascentium has the option to accelerate the loan, demanding immediate payment of all outstanding amounts, including remaining payments discounted to present value, calculated at the higher of 3% per annum or the lowest rate allowed by law. Additionally, Ascentium can seize the collateral, sell it, and use the proceeds to offset the franchisee's debt, after deducting any associated costs.
Furthermore, the franchisee is responsible for covering Ascentium's expenses, including reasonable attorney's fees, incurred while enforcing the financing agreement. Late payments incur a charge of 10% of the payment amount, capped at the highest rate permitted by applicable law. Returned payments due to issues like insufficient funds are subject to a $30 fee, again not exceeding the legal maximum.
It is important to note that a franchisee's breach of the Ascentium Equipment Finance Agreement can also be considered a breach of their franchise agreement with Chesters. This could potentially lead to further repercussions under the franchise agreement itself. Ascentium also has the right to assign its rights and interests in the loan and collateral, and the assignee's rights will not be subject to any claims, defenses, or set-offs the franchisee may have had against Ascentium.