Under the Chesters Equipment Finance Agreement (EFA), what is the 'Actual Cost'?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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's 2025 Franchise Disclosure Document, the Actual Cost under the Equipment Finance Agreement (EFA) is defined as the final actual cost of the collateral and any financed soft costs that Chesters pays to the supplier and any taxing authority. This means the total price Chesters ultimately pays for the equipment and related expenses, such as shipping or installation, plus any applicable taxes.
For a prospective Chesters franchisee, this definition is important because the financed amount of the loan can be adjusted to reflect the Actual Cost. If the Actual Cost is different from the Estimated Cost initially provided, Chesters has the right to adjust the financed amount accordingly. This could mean the franchisee's payments increase or decrease depending on whether the final costs are higher or lower than expected.
Chesters also has the right to request the franchisee to execute a document reflecting these adjustments. If requested, Chesters will provide evidence of the cost changes that necessitate the adjustments. Therefore, it is important for a franchisee to keep accurate records and communicate effectively with Chesters and the supplier to ensure transparency and avoid any discrepancies in the financed amount. Franchisees should also carefully review any documents related to cost adjustments and seek clarification if needed.