Under the Chesters EFA, am I allowed to encumber the collateral?

According to Chesters' 2025 Franchise Disclosure Document, under the Equipment Finance Agreement (EFA), franchisees are explicitly prohibited from encumbering the collateral. This means a franchisee cannot use the equipment or assets financed through the EFA as security for any other loans or obligations.

This restriction protects Chesters' interest in the collateral. If a franchisee were to default on another debt and had used the Chesters-financed equipment as collateral, it could jeopardize Chesters' ability to recover those assets. This clause ensures that Chesters maintains a primary claim on the financed equipment.

For a prospective Chesters franchisee, this condition means they must seek financing from other sources if they need additional capital and cannot use the equipment financed under the EFA as collateral. This is a fairly standard practice in franchising, as franchisors typically want to maintain clear and uncontested ownership or security interests in the assets essential to the operation of the franchise.