Under the Chesters EFA, what am I required to do if the collateral is damaged?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
ll 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.
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- Risk of Loss: You assume and shall bear the entire risk of loss, theft, damage and destruction of the Collateral from any cause whatsoever, and no loss, theft, damage or destruction of the Collateral shall relieve you of the obligation to make Payments or any other obligation under this EFA. You shall promptly notify us in writing of such loss, theft, damage or destruction. If damage of any kind occurs to any item of Collateral, you, at our option, shall at your expense (a) place the Collateral in good repair, condition or working order, or (b) if the Collateral cannot be repaired or is lost, stolen or suffers a constructive loss under an insurance policy covering the Collateral, pay to us the "Casualty Value." The Casualty Value will be equal to the total of (i) accrued and unpaid amounts then due and owing, and (ii) the remaining future Payments discounted to present value at 3%, in both cases as of the date the Casualty Value is received by us.
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- Choice of Law; Waiver of Jury Trial: Secured Party is an FDIC-insured institution with its main office in Alabama. This EFA is governed by applicable Federal Law and the laws of the State of Alabama with respect to interest and matters that are material to the determination of interest. This EFA is otherwise governed by the law of the State of Alabama, excluding conflicts of law principles. If any amount charged, collected or due exceeds the maximum amount permitted by applicable law, Secured Party shall make necessary adjustments to eliminate such excess. You consent to the non-exclusive jurisdiction of the courts located in Jefferson County, Alabama in any action or proceeding relating to this EFA, YOU WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING, AND YOU WAIVE ANY RIGHT TO ASSERT THIS IS AN INCONVENIENT FORUM.
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Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, if any collateral is damaged, the franchisee bears the entire risk of loss, theft, damage, and destruction from any cause. The franchisee must promptly notify Chesters in writing of such loss, theft, damage, or destruction.
At Chesters' option, the franchisee will be required, at their own expense, to either (a) place the collateral in good repair, condition, or working order, or (b) if the collateral cannot be repaired or is lost, stolen, or suffers a constructive loss under an insurance policy, pay Chesters the "Casualty Value." The Casualty Value is equal to the total of (i) accrued and unpaid amounts then due and owing, and (ii) the remaining future Payments discounted to present value at 3%, in both cases as of the date the Casualty Value is received by Chesters.
Furthermore, the franchisee is responsible for maintaining insurance on the collateral as specified by Chesters, naming Chesters as the loss payee. If the franchisee fails to provide satisfactory proof of insurance, Chesters has the right, but not the obligation, to place insurance on the collateral, with Chesters as the insured. The franchisee's monthly payment will then include charges for the premium expense, an annualized finance charge not to exceed 15% on the premium expense, and fees for billing and other administrative services, not exceeding $7.00 per month.