What is Chesters' obligation to make payments under the EFA?

According to Chesters's 2025 Franchise Disclosure Document, a franchisee's obligation to make payments and pay other amounts due under the Equipment Finance Agreement (EFA) is absolute and unconditional. This obligation is not subject to any reduction or set-off for any reason. The EFA is also described as a non-cancelable agreement.

Chesters requires subsequent payments to be made on the same day of each month following the commencement date until all obligations are fulfilled. The franchisee also agrees to pay all other amounts due as specified in the agreement. Even if an invoice is not received, payments are still due. Chesters is authorized to adjust the payment amount to maintain the same interest rate if the financed amount changes. Prepayment of the EFA is only allowed according to the Prepayment Addendum.

This means that once a Chesters franchisee enters into an EFA, they are legally bound to make all required payments, regardless of any issues or disputes that may arise. This includes situations where the franchisee may be dissatisfied with the equipment or services provided. The franchisee's only recourse in such cases is against the supplier or manufacturer, not against Chesters as the secured party. This arrangement places a significant financial responsibility on the franchisee, as they must continue to make payments even if the collateral is unsatisfactory or undelivered.

Furthermore, the franchisee is responsible for all taxes, fees, fines, interest, and penalties related to the use or ownership of the collateral. Chesters has the right to elect to pay any such taxes directly and be reimbursed by the franchisee. The franchisee also agrees to indemnify Chesters from any suits, claims, losses, or damages relating to the use or ownership of the collateral. These obligations survive the expiration or termination of the EFA, adding to the long-term financial burden on the franchisee.