What must an Atwell Suites franchisee ensure regarding knowledge of fraudulent activity related to card transactions?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
8.1 Your Representations and Warranties. Without limiting any other warranties hereunder, you represent, warrant to, and covenant with us, and with the submission of each Sales Draft reaffirm that:
(a) each Card transaction is genuine and arises from a bona fide transaction permissible under the Card Organization Rules by the Cardholder directly with you, represents a valid obligation for the amount shown on the Sales Draft, preauthorized order, or Credit Draft, and does not involve the use of a Card for any other purpose;
(b) each Card transaction represents an obligation of the related Cardholder for the amount of the Card transaction;
(c) the amount charged for each Card transaction is not subject to any dispute, set-off or counterclaim;
(d) each Card transaction amount is only for respective merchandise or services (including taxes, but without any surcharge, except as required by Card Organization Rules) sold, leased, or rented by you pursuant to your business as indicated on the Application and, except for any delayed delivery or advance deposit Card transactions expressly authorized by the Agreement, that merchandise or service was actually delivered to or performed for the Cardholder entering into that Card transaction simultaneously upon your accepting and submitting that Card transaction for processing;
(e) with respect to each Card transaction, you have no knowledge or notice of any fact, circumstance, or defense which would indicate that such Card transaction is fraudulent or not authorized by the related Cardholder or which would otherwise impair the validity or collectability of that Cardholder's obligation arising from that Card transaction or relieve that Cardholder from liability with respect thereto;
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites's 2025 Franchise Disclosure Document, franchisees must ensure they have no knowledge or notice of any fact, circumstance, or defense indicating a card transaction is fraudulent or unauthorized by the cardholder. This includes anything that might impair the validity or collectability of the cardholder's obligation arising from the transaction or relieve the cardholder from liability.
This requirement is part of a broader set of representations and warranties that Atwell Suites franchisees make to the franchisor with each sales draft submission. These warranties confirm that each card transaction is genuine, arises from a legitimate transaction between the cardholder and the franchisee, and represents a valid obligation for the amount shown. The franchisee also warrants that the amount charged is not subject to any dispute, set-off, or counterclaim and is only for merchandise or services actually delivered or performed.
In practical terms, this means Atwell Suites franchisees must be vigilant in monitoring transactions for any signs of fraud. They should train staff to recognize suspicious activity, such as unusual purchase patterns or discrepancies in cardholder information. Franchisees should also implement security measures like using Address Verification Service (AVS) and requiring Card Verification Codes for Card Not Present Transactions to help identify potentially fraudulent transactions. While AVS can help lower interchange rates, it does not guarantee a transaction is valid.
Failure to meet these obligations can result in financial responsibility for chargebacks, third-party-based fees, servicer fees, and other amounts arising from fraudulent activity processed through the franchisee's merchant systems or merchant account, regardless of any AVS response received. Franchisees are also responsible for promptly reviewing statements and reports related to card transaction activity and notifying the franchisor of any discrepancies or errors within ninety days to avoid potential liabilities.