Under what condition is a Bhc franchisee prohibited from altering or closing the bank account used for electronic funds transfers?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor requires payment of the Royalty and Marketing and Promotion Fees by electronic funds transfer ("EFT"), through the Automated Clearing House ("ACH") electronic network for financial transactions (or such other automatic payment mechanism Franchisor may designate) directly from Franchisee's account into Franchisor's operating account. Franchisee must (i) execute and deliver to Franchisor's bank required pre-authorized check forms and other instruments or drafts to enable Franchisor to draw directly from Franchisee's bank account all fees payable under the terms of this Agreement and (ii) open and maintain a single bank account for such payments (with overdraft protection from Franchisee's operating account) always keeping the minimum balance in such account as Franchisor may reasonably designate. Franchisee must not alter or close this account except upon Franchisor's prior written approval. Any failure by Franchisee to implement such EFT system in strict accordance with Franchisor's instructions will constitute a material breach of this Agreement.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, Bhc requires franchisees to pay royalties and marketing/promotion fees via electronic funds transfer (EFT). To facilitate this, franchisees must open and maintain a specific bank account designated for these payments.
The FDD stipulates that a Bhc franchisee is prohibited from altering or closing this designated bank account without obtaining prior written approval from Bhc. This requirement ensures that Bhc can reliably collect the necessary fees through the Automated Clearing House (ACH) network.
Failure to comply with this EFT system, including altering or closing the designated bank account without approval, constitutes a material breach of the franchise agreement. This provision protects Bhc's financial interests and ensures a consistent payment process across all franchise locations.