Under the Chesters EFA, am I allowed to lease the collateral?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
YOU HAVE NO RIGHT TO SELL, TRANSFER, ASSIGN, LEASE OR ENCUMBER THE COLLATERAL OR THIS EFA.
We may sell, transfer, assign or encumber this EFA, in whole or in part, without notice to you or your consent.
You agree that if we sell, transfer, assign or encumber this EFA, the assignee will have the rights and benefits that we assign to the assignee and will not have to perform any of our obligations.
You agree that the rights of the assignee will not be subject to any claims, defenses or set-offs that you may have against us.
We and our agents and representatives shall have the right at any time during regular business hours to inspect the Collateral and for that purpose to have access to the location of the Collateral.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, under the EFA (Equipment Finance Agreement), you are explicitly prohibited from leasing the collateral. The agreement states that you have no right to sell, transfer, assign, lease, or encumber the collateral or the EFA. This restriction is in place to protect Chesters's interest in the collateral, which serves as security for the financing provided.
This restriction means that as a Chesters franchisee, you must use the equipment yourself and cannot generate income by leasing it to others. Any attempt to lease the collateral would be a breach of the EFA, potentially leading to default and repossession of the equipment. Chesters retains the right to inspect the collateral at any time during regular business hours to ensure compliance with these terms.
Chesters, however, retains the right to sell, transfer, assign, or encumber the EFA without needing to notify you or obtain your consent. This means Chesters can transfer their rights and benefits under the EFA to another party, and the assignee will not be subject to any claims, defenses, or set-offs you may have against Chesters. This is a standard practice in financing agreements, allowing the lender flexibility in managing its assets.