Under what circumstances is a Bang Cookies franchisee prohibited from withholding payments to the franchisor?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall not, on grounds of the alleged nonperformance, material breach, or default by Franchisor of this Agreement, any other agreement between Franchisor and Franchisee, or for any other reason, withhold any payment, fee, or any other amount payable by Franchise to Franchisor pursuant to this Agreement, including, without limitation, the payment of the Royalty Fee and Advertising Contributions, or any other payment obligation by Franchisee to Franchisor. Franchisee shall not have the right to offset or withhold any liquidated or unliquidated amount allegedly due to Franchisee from Franchisor against any payment, fee, or any other amount payable to Franchisor pursuant to this Agreement or any other payment obligation by Franchisee to Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, a franchisee is never entitled to withhold payments due to Bang Cookies under any circumstances.
Specifically, Bang Cookies's franchise agreement stipulates that a franchisee cannot withhold any payment, fee, or amount owed to Bang Cookies, regardless of any alleged nonperformance, breach, or default by Bang Cookies. This includes, but is not limited to, Royalty Fees and Advertising Contributions.
Furthermore, the franchisee does not have the right to offset or withhold any amount, whether liquidated or unliquidated, that they claim Bang Cookies owes them against any payment due to Bang Cookies. This means that even if a franchisee believes Bang Cookies has financially wronged them, they must still continue to make all required payments.
This type of clause is not uncommon in franchise agreements, as it protects the franchisor's revenue stream and ensures consistent payments. However, it places a significant financial burden on the franchisee, who must pursue any claims against the franchisor separately while continuing to meet their financial obligations.