Does Beauty Bungalows require franchisees to sign an Authorization for Electronic Withdrawal?
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's 2025 Franchise Disclosure Document, franchisees are required to sign an agreement for preauthorized payments. Appendix B to the Franchise Agreement includes an "Authorization Agreement for Preauthorized Payment Service." This agreement allows Beauty Bungalows to obtain royalty payments owed by the franchisee directly from the franchisee's bank account.
The agreement specifies that the franchisee authorizes Beauty Bungalows to initiate payment entries to their account for all royalty amounts due under the Franchise Agreement. The franchisee also authorizes their bank to accept these payment entries and deduct the amounts from their account without responsibility for verifying the correctness of the payments. The agreement requires the franchisee to provide the account number, name of the financial institution, payment amount, and date on or immediately after which the payment should be deducted.
This type of agreement is common in franchising as it ensures timely and consistent payment of royalties. It benefits Beauty Bungalows by streamlining the payment process and reducing the risk of late or missed payments. However, it places a responsibility on the franchisee to ensure sufficient funds are available in their account to cover the royalty payments when they become due. Franchisees should carefully review the terms of the Franchise Agreement related to royalty calculations to understand how these amounts are determined.