What recourse does Big Apple Bagels have if a franchisee fails to make timely payments?

llected from the customer prior to disbursement of the funds by the Third Party Delivery Service to the Franchisee. Examples of Third Party Delivery Services include, but are not limited to GrubHub, DoorDash, UberEats, ezCater.

• d. Interest on Late Payments. All royalty fees, Marketing Fund contributions and other amounts which Franchisee owes to Franchisor or its Affiliate shall bear interest after their due date at the lower of 2% per month, or the highest contract rate allowed by local law. Franchisor may compound the interest on a monthly basis. Franchisee acknowledges that this Paragraph shall not constitute Franchisor's agreement to accept such payments after same are due or a commitment by Franchisor to extend credit to, or otherwise finance, Franchisee's operation of the BAGELS Store. Further, Franchisee acknowledges that his failure to pay all such amounts when due shall constitute grounds for termination of this Agreement, as provided in Section 16 hereof, notwithstanding the provisions of this Paragraph.
• e. Application and Set-Off of Payments. Franchisee shall not be allowed to set off amounts owed to Franchisor or other amounts due hereunder, against any monies owed to Franchisee, nor shall Franchisee in any event withhold any amounts due to any alleged nonperformance by Franchisor hereunder, which right of set off is expressly waived by Franchisee. Franchisor shall be allowed to set off amounts owed to Franchisee against monies owed to Franchisor by Franchisee. Notwithstanding any designation by Franchisee, Franchisor shall have sole discretion to apply any payments by Franchisee to any past due indebtedness of Franchisee for royalty fees, Marketing Fund contributions, purchases from Franchisor or its Affiliates, interest or other indebtedness owed by Franchisee to Franchisor or its Affiliates.
• f. Electronic Bank Draft Plan. Franchisee shall make payments of the royalty fee, Marketing Fund contributions, and all other payments due Franchisor through an Electronic Bank Draft Plan on a bank account Franchisee is required to establish and maintain for the purpose of making payments to Franchisor. Franchisee shall execute such documents as may be required from time to time by Franchisor to permit Franchisor to withdraw from Franchisee's general operating checking account the amounts due Franchisor. The form authorizing the electronic bank draft is attached as Rider D.
  • i. In the event Franchisee fails to submit required sales reports to Franchisor when due, and they have the current POS system in use, Franchisor reserves the right to withdraw an amount for the royalty fee and Marketing Fund contribution that is based upon information obtained through the POS system for that week. If Franchisee was not required to update to the current POS system, then Franchisor reserves the right to withdraw an estimated amount for the royalty fee and Marketing Fund contribution, based on the

average Gross Revenues for the last ten (10) reported weeks. If Franchisee fails to report Gross Revenues for five (5) consecutive weeks, Franchisor reserves the right to withdraw an estimated amount for the royalty fee and Marketing Fund contribution, based on the average Gross Revenues, plus ten percent (10%) for the last ten (10) reported weeks.

• ii. Franchisee may not make any change in its banking relationships, including any change in the account number of its general operating account, or any change in banks, without executing all documents and paying any out-ofpocket expenses required to authorize payments to Franchisor by electronic bank draft from Franchisee's new bank account.
• iii. In the event any electronic bank draft is declined, dishonored, or refused, due to insufficient funds, Franchisor will attempt another electronic bank draft. In the event any electronic bank draft is dishonored, Franchisee shall pay the Franchisor an assessment of Twenty-Five Dollars ($25.00) for each of the first three (3) times payment is declined due to insufficient funds in any calendar year; after the third time in any calendar year, the assessment is Fifty Dollars ($50.00) each.

Source: Item 22 — CONTRACTS (FDD pages 86–87)