What does the interest rate stated in the Chesters EFA exclude?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, the interest rate stated in the Equipment Finance Agreement (EFA) excludes two specific items. First, it excludes the pro-rated payment, which is calculated as 1/30th of a standard payment multiplied by the number of days between the loan's first funding date and the first monthly due date. Second, the stated interest rate excludes all fees associated with the EFA.
This means that the actual cost of borrowing under the EFA will be higher than what the stated interest rate might suggest. A prospective Chesters franchisee needs to factor in both the pro-rated payment and any additional fees to accurately assess the total cost of financing the equipment. The pro-rated payment covers the initial partial month, while the fees could include various administrative or service charges related to the loan.
It is important for a potential Chesters franchisee to carefully review the terms of the EFA and ask for a complete breakdown of all fees and the calculation of the pro-rated payment to fully understand the financial obligations. Understanding these additional costs is crucial for budgeting and financial planning when investing in a Chesters franchise.