What methods can be used to fund the Reserve Account for an Atwell Suites franchise?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
13.2 Funding the Reserve Account.
(a) Timing. The Reserve Account shall be fully funded: (i) immediately in instances of fraud, suspected fraud, the occurrence of an Event of Default, or any party providing notice of termination of the Agreement; or (ii) upon three days' notice if required for any other reason.
(b) Method. The Reserve Account may be funded by all or any combination of the following: (i) one or more debits to your Settlement Account or any other accounts held by either of us or any of our respective Affiliates, at any financial institution maintained in the name of Client, any of its principals, or any of its guarantors, or if any of same are authorized signers on such account; (ii) our collection of any payments or amounts (including settlement funds) otherwise due to you; or (iii) with our consent, your delivery to us of a letter of credit issued by a financial institution acceptable to us and in a form satisfactory to us.
(c) Holding and Return of Funds. Any Reserve Account will be held by us for the greater of ten (10) months after termination of the Agreement or for such longer period of time as is consistent with our liability for your Card transactions and Chargebacks in accordance with Card Organization Rules, at which time, we will return all remaining amounts in the Reserve Account to you.
We will hold funds pursuant to this Section 13.2 in master account(s) with your funds allocated to separate sub accounts.
Unless specifically required by law, you shall not be entitled to interest on any funds held by us in a Reserve Account.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to the 2025 Atwell Suites Franchise Disclosure Document, the Reserve Account can be funded through several methods. The timing for funding the Reserve Account is immediate in cases of fraud, suspected fraud, an Event of Default, or if a party provides notice of termination of the agreement. Otherwise, funding is required upon three days' notice for any other reason.
Specifically, Atwell Suites allows the Reserve Account to be funded by one or a combination of the following methods: debits to the franchisee's Settlement Account or any other accounts held by the franchisor or its affiliates at any financial institution in the name of the franchisee, its principals, or guarantors (or if any of them are authorized signers on the account); collection of any payments or amounts (including settlement funds) otherwise due to the franchisee; or with the franchisor's consent, the franchisee's delivery of a letter of credit issued by a financial institution acceptable to the franchisor and in a form satisfactory to them.
Atwell Suites will hold any Reserve Account for the greater of ten months after the termination of the agreement or for a longer period consistent with their liability for the franchisee's card transactions and chargebacks, according to Card Organization Rules. After this period, any remaining amounts in the Reserve Account will be returned to the franchisee. The funds are held in master accounts with sub-accounts allocated to each franchisee, and unless required by law, franchisees are not entitled to interest on the funds held in the Reserve Account.
This means that Atwell Suites franchisees need to be prepared to fund the Reserve Account quickly under certain circumstances, and they should understand the implications of using different funding methods. The option to use a letter of credit provides some flexibility, but it requires the franchisor's consent and a suitable financial institution. Franchisees should also be aware that the funds are held without interest and may be held for an extended period after the agreement terminates.