What is the Sublicensor obligated to do with the license fees received from the Bens Soft Pretzels Sublicensee?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
Sublicensor agrees to remit such amounts to Licensor or any other appropriate party in a timely fashion.
The Sublicensee agrees to execute and deliver to Sublicensor the appropriate preauthorized check and electronic funds transfer forms for his store's checking account prior to the opening of the store so that Sublicensor will be able to deposit the license payments that accrue on a timely basis.
The Sublicensor will then deposit the amounts due into its account by the preauthorized check or electronic funds transfer system.
Source: Item 22 — CONTRACTS (FDD pages 46–47)
What This Means (2025 FDD)
According to the 2025 Bens Soft Pretzels Franchise Disclosure Document, the Sublicensor has a specific obligation regarding the license fees they receive from the Sublicensee. The Sublicensor must remit these amounts to the Licensor or any other appropriate party in a timely fashion. This means the Sublicensor acts as a pass-through entity for the license fees.
In practical terms, a Bens Soft Pretzels Sublicensee pays their license fees to the Sublicensor, who then forwards those payments to the Licensor. This arrangement ensures that the Licensor receives the royalties and fees they are due under the overarching licensing agreement. The Sublicensee is required to provide preauthorized check and electronic funds transfer forms to the Sublicensor to facilitate these payments.
This arrangement benefits the Licensor by streamlining the collection process, as they deal with the Sublicensor rather than multiple Sublicensees. It also places a responsibility on the Sublicensor to manage and remit these funds accurately and promptly. The Sublicensee needs to be aware of this payment structure and ensure they comply with the payment schedule to avoid any potential defaults or breaches of their Sublicense agreement with Bens Soft Pretzels.