Under the Chesters EFA, what is the condition for the security interest to be granted?

According to Chesters's 2025 Franchise Disclosure Document, under the Equipment Finance Agreement (EFA), a security interest is granted to secure the payment and performance of the franchisee's obligations. Specifically, the franchisee grants Chesters a security interest in the collateral, including all accessories, additions, replacements, proceeds, and products, under the Uniform Commercial Code (UCC). This security interest ensures that Chesters has a legal claim on the specified assets to cover the franchisee's financial responsibilities under the EFA.

This means that if a Chesters franchisee fails to meet their payment or performance obligations, Chesters has the right to seize and potentially liquidate the collateral to recover the outstanding debt. The collateral serves as a guarantee for the loan or financing provided by Chesters, reducing the risk for the company.

For a prospective Chesters franchisee, this condition highlights the importance of understanding and meeting all financial obligations outlined in the EFA. Failure to do so could result in the loss of the secured assets. Franchisees should carefully evaluate their ability to manage the financial commitments associated with the franchise to avoid potential default and the subsequent loss of collateral.