Under the Chesters EFA, what does the phrase 'Secured Party' refer to?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the 'Secured Party' in the Equipment Finance Agreement (EFA) is an FDIC-insured institution with its main office in Alabama. This entity is essentially the lender or financial institution providing the financing for the franchisee's equipment.
As the secured party, this institution has certain rights and protections under the EFA. These include the right to inspect the collateral (the financed equipment) at any time during regular business hours and access its location. The secured party also has a security interest in the collateral, meaning they have a legal claim on the equipment to secure the franchisee's payment and performance obligations under the EFA. This security interest is governed by the Uniform Commercial Code (UCC).
Furthermore, the EFA stipulates that there are no warranties by or on behalf of the secured party, and neither the supplier of the equipment nor any other party is the secured party's agent. The Debtor (franchisee) acknowledges that the secured party makes no warranties as to the condition, merchantability, or fitness of the collateral for any particular purpose and that the Debtor accepts the collateral "AS IS" and with all faults. This means that if the equipment is unsatisfactory or the supplier fails to deliver it, the franchisee's only recourse is against the supplier or manufacturer, not against the secured party. The secured party is also entitled to receive payments from the franchisee and can adjust the payment amount if the financed amount changes.
In the event of a dispute, the franchisee consents to the non-exclusive jurisdiction of the courts located in Jefferson County, Alabama, and waives any right to a jury trial. The agreement is governed by applicable Federal Law and the laws of the State of Alabama. Chesters, as the franchisor, is not the secured party under the EFA.