Under the Chesters EFA, what is the funding of the loan to Chesters?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
You irrevocably instruct us to pay the Supplier on your behalf, which payment is the funding of our loan to you.
The Financed Amount is based upon the total estimated cost of the Collateral and financed Soft Costs (adjusted for any non-reimbursed down payments made by you) (the "Estimated Cost"), which Estimated Cost you and/or the Supplier have provided to us.
If the final actual cost of the Collateral and any financed Soft Costs that we pay the Supplier and any taxing authority (the "Actual Cost") is different than the Estimated Cost, you authorize us to adjust the Financed Amount to the Actual Cost.
If we request, you agree to execute a document reflecting such adjustments and we will provide you with evidence of our cost changes requiring such adjustments if you request.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, the funding of the loan to the franchisee under the Equipment Finance Agreement (EFA) is facilitated through a direct payment to the supplier on behalf of the franchisee. Specifically, the franchisee irrevocably instructs the lender, identified as Regions Bank d/b/a Ascentium Capital, to make this payment to the supplier. This payment to the supplier constitutes the funding of the loan from the lender to the franchisee.
The financed amount is determined by the total estimated cost of the collateral, which includes equipment, inventory, and personal property, as well as any financed soft costs such as shipping, installation, training, taxes, and fees approved for financing under the EFA. This estimated cost is adjusted for any non-reimbursed down payments made by the franchisee. The estimated cost is provided to the lender by either the franchisee or the supplier.
Furthermore, if the final actual cost of the collateral and financed soft costs differs from the initial estimated cost, Chesters authorizes the lender to adjust the financed amount to reflect the actual cost. The franchisee may be required to execute a document reflecting these adjustments, and the lender will provide evidence of the cost changes upon request. This ensures that the loan amount accurately reflects the final expenses incurred for the equipment and related costs.