Under the Chesters EFA, what is the condition for the pro-rated payment to be due?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to pay us: (a) the number of payments in the amount(s) shown above (each a "Payment") plus (b) a pro-rated payment equal to 1/30th of a standard Payment times the number of days from the funding date of the loan (the "Commencement Date") to the first monthly due date specified by us (the "First Due Date").
The interest rate stated above excludes this pro-rated payment and all fees.
The pro-rated payment is due on the First Due Date, and the first Payment is due either in advance, on the First Due Date, or on the second Due Date, as specified by us.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, under the Equipment Finance Agreement (EFA), a pro-rated payment is required. This pro-rated payment is equal to 1/30th of a standard payment multiplied by the number of days between the loan's funding date (Commencement Date) and the first monthly due date specified by Chesters (First Due Date).
This pro-rated payment is explicitly stated as being due on the First Due Date. The regular first payment is due either in advance, on the First Due Date, or on the second Due Date, as specified by Chesters. The interest rate quoted in the EFA excludes both this pro-rated payment and all fees associated with the financing.
In practical terms, this means a new Chesters franchisee will likely have a slightly smaller, pro-rated payment due shortly before their first full payment. This arrangement compensates Chesters for the period between when the loan is funded and the start of the standard monthly payment cycle. Franchisees should ensure they understand when their 'Commencement Date' is to accurately calculate and budget for this initial pro-rated payment.