Does Beauty Bungalows require franchisees to deposit all revenue into an account controlled by the franchisor?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
APPENDIX B TO FRANCHISE AGREEMENT
AUTHORIZATION AGREEMENT FOR PREAUTHORIZED PAYMENT SERVICE
I (or We if there are joint owners of the account referenced later in this agreement) authorize and request Beauty Bungalows Franchising, LLC (the "Company") to obtain payment for all royalty amounts I (we) owe to the Company pursuant to the Franchise Agreement between the Company and me (us), as these amounts become due by initiating a payment entry to my (our) account. The account number, name of financial institution, payment amount, and date on or immediately after which payment should be deducted from the account are identified below. In addition, I (we) authorize and request the financial institution, now referred to as the Bank, to accept the payment entries presented to the Bank and to deduct them from my (our) account without responsibility for the correctness of these payments.
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, franchisees are not required to deposit all revenue into an account controlled by the franchisor. However, Beauty Bungalows does require franchisees to authorize preauthorized payments for royalty amounts owed to the company. This is facilitated through an authorization agreement where the franchisee authorizes Beauty Bungalows Franchising, LLC to obtain payment for all royalty amounts due, by initiating a payment entry to the franchisee's account.
The authorization includes the franchisee's account number, the name of the financial institution, the payment amount, and the date on or immediately after which payment should be deducted. The franchisee also authorizes their bank to accept these payment entries and deduct them from their account without responsibility for the correctness of these payments.
This preauthorized payment service ensures that Beauty Bungalows receives royalty payments in a timely and consistent manner. While franchisees maintain control over their general revenue, they agree to allow Beauty Bungalows to directly debit their account for royalty fees. This arrangement is a common practice in franchising, providing franchisors with a reliable method for collecting ongoing fees while reducing administrative burdens for both parties.