Under the Chesters EFA, what is Chesters agreeing to borrow from the secured party?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
We agree to lend to you, and you agree to borrow from us, the Financed Amount set forth above for the financing of the Collateral and any shipping, installation, training, taxes, fees and other soft costs that we have approved for financing under this EFA (together, the "Soft Costs").
You irrevocably instruct us to pay the Supplier on your behalf, which payment is the funding of our loan to you.
COLLATERAL: Items of equipment, inventory and personal property related thereto as generally described herein which Regions Bank, an Alabama banking corporation d/b/a Ascentium Capital ("Secured Party") and Debtor agree that a more detailed description of the property being financed shall be maintained by us among our books and records in whatever more detailed description of the property financed is received from the supplier(s) of such property (the "Supplier") and, absent manifest error, such detailed description shall be considered incorporated into this Equipment Finance Agreement ("EFA") and shall be provided to Debtor promptly upon request.
Personal Property Description: Flatbed Truck with sleigh clamps, Snow Plow with 20 ft blade
PAYMENT SCHEDULE: 1 @ $5,000.00, 47 @ $1,432.15
FINANCED AMOUNT: $61,550.01
INTEREST: Payments include interest at 9.00% per annum on the unpaid Financed Amount calculated based on a year consisting of 12 months of 30 days each.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, under the Equipment Finance Agreement (EFA), the franchisee (referred to as "you" or "Debtor") is agreeing to borrow a "Financed Amount" from Regions Bank, an Alabama banking corporation d/b/a Ascentium Capital (referred to as "Secured Party"). The Financed Amount, in this case, is $61,550.01. This amount is used for financing the Collateral, which includes items of equipment, inventory, and personal property related to the franchise. In this specific example, the personal property is described as a Flatbed Truck with sleigh clamps and a Snow Plow with a 20 ft blade. The agreement also covers any shipping, installation, training, taxes, fees, and other soft costs approved for financing under the EFA.
The EFA outlines that Chesters irrevocably instructs the Secured Party to pay the Supplier on their behalf, which constitutes the funding of the loan to the franchisee. The interest on this financed amount is included in the payments, calculated at 9.00% per annum on the unpaid Financed Amount, based on a year of 12 months with 30 days each. The agreement specifies a payment schedule of 1 payment of $5,000.00, followed by 47 payments of $1,432.15.
This arrangement means that Chesters is not directly receiving cash but rather having the Secured Party finance the necessary equipment and soft costs for setting up the franchise. The franchisee is then obligated to make regular payments to the Secured Party according to the agreed-upon schedule. The detailed description of the financed property is maintained by the Secured Party and incorporated into the EFA, ensuring clarity on what is being financed. This detailed description will be provided to the Debtor upon request.