When is the Insufficient Funds fee due for an All States M.E.D. franchise?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee1 | 8% of Gross Revenues | Due monthly by the 10th of the month for the previous month | "Gross Revenue" means all of your revenue from operating the franchise, but excluding taxes collected from customers and paid to taxing authority, and reduced by the amount of any documented refunds, credits, allowances, and chargebacks the Business in good faith gives to customers. FA 3.2. |
| Local Advertising | The greater of 2% of Gross Revenues or $1,000 per month | Monthly | You are required to spend these sums on local advertising and promotions pursuant to our guidelines. FA 11.2. |
| Grand Opening Advertising | $3,000 - $10,000 | Around the time of opening | You agree to pay these sums to promote the opening of your business pursuant to our guidelines. FA 11.2. |
| Interest | Lesser of 1.5% per month or the highest commercial contract interest rate allowed by law | 15 days after billing | Due on all overdue amounts. FA 3.5. |
| National Franchise Convention Fee | $500 | As Incurred | We reserve the right to charge this fee if we offer an Annual Franchise Convention. FA 3.6. |
| Maintenance and Refurbishing of Business | You must reimburse our expenses | As incurred | If, after we notify you, you do not undertake efforts to correct deficiencies in outlet appearance, then we can undertake the repairs and you must reimburse us. FA 3.7. |
| Insufficient Funds | $75 | As incurred | Due if you have insufficient funds in your EDTA to cover a payment, or if you pay by check, a check is returned for insufficient funds. FA 3.8. |
| Relocation Assistance | Our actual cost | At time of assistance | If you need our assistance to relocate. FA 3.9. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, the Insufficient Funds fee of $75 is due 'as incurred.' This fee is charged if a franchisee has insufficient funds in their EDTA (Electronic Draft Transfer Agreement) to cover a payment, or if a check payment is returned due to insufficient funds.
In practical terms, this means that if an All States M.E.D. franchisee attempts to make a payment to the franchisor and the payment is rejected due to insufficient funds, the franchisee will immediately owe All States M.E.D. $75 in addition to the original amount due. This fee is intended to cover the administrative costs incurred by the franchisor as a result of the failed payment.
Franchisees should ensure they maintain sufficient funds in their accounts to avoid incurring this fee. It is a fairly standard practice in franchising to charge a fee for insufficient funds, as it represents a tangible cost to the franchisor. Franchisees should also be aware of alternative payment methods that may avoid the risk of insufficient funds, such as direct wire transfers or certified checks.