Is Chesters liable for consequential or incidental damages under the EFA?

According to Chesters' 2025 Franchise Disclosure Document, Chesters will not be liable for any consequential or incidental damages for any default by them under the Equipment Finance Agreement (EFA). This means that if Chesters breaches the EFA, franchisees are limited in the types of damages they can recover from Chesters.

Consequential damages are indirect losses that result from a breach of contract, such as lost profits or business opportunities. Incidental damages are expenses incurred by the franchisee in trying to mitigate the damages caused by the breach, such as the cost of renting temporary equipment. By including this clause in the EFA, Chesters aims to limit its financial exposure in the event of a dispute with a franchisee.

This type of clause is relatively common in franchise agreements. Prospective Chesters franchisees should carefully consider the implications of this limitation of liability, as it could affect their ability to recover losses if Chesters fails to meet its obligations under the EFA. It is advisable to seek legal counsel to fully understand the risks and benefits associated with this provision.