What section of the Bor Restoration franchise agreement covers the application of payments?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
3.7 Application of Payments
- a. Notwithstanding any designation by you as to the application of a payment, we will allocate any payments made by you first to Late Fees, Report Late Fees, and Default Interest, then to any Royalties or other fees that are past due, and then to the current Royalties and other fees owed. The above allocation will not postpone any payments due on any current or future due date.
- b. In our sole discretion, we will also have the right to allocate in the same manner as stated above any payments or any credits from third-party vendors delivered to us on your behalf. To the extent necessary to carry out the intent of this Section, you appoint us as your attorney-in-fact coupled with an interest for the sole purpose of allocating any such funds received. This power of attorney will continue throughout the Term of this Franchise Agreement, any extension thereof, and, if applicable, after the termination of this Franchise Agreement, but in the latter case, only to the extent that you still owe us money.
Source: Item 23 — Receipts (FDD pages 40–202)
What This Means (2024 FDD)
According to the 2024 Bor Restoration Franchise Disclosure Document, Section 3.7 of the franchise agreement details how payments are applied. This section specifies that Bor Restoration will first allocate any payments received from the franchisee to cover Late Fees, Report Late Fees, and Default Interest. After these are satisfied, payments will then be applied to any past due Royalties or other fees, and finally to current Royalties and other fees owed. This order of allocation will not delay any payments due on current or future due dates.
Bor Restoration also has the right to allocate payments or credits from third-party vendors made on behalf of the franchisee in the same manner. To facilitate this, the franchisee appoints Bor Restoration as their attorney-in-fact, granting them the authority to allocate these funds. This power of attorney remains in effect throughout the term of the Franchise Agreement, including any extensions, and even after termination if the franchisee still owes money to Bor Restoration.
This section is important for prospective franchisees as it clarifies how their payments will be applied, ensuring that late fees and past dues are prioritized before current obligations. Franchisees should be aware that even if they designate a payment for a specific purpose, Bor Restoration has the ultimate authority to allocate it according to the outlined priorities. This could impact a franchisee's cash flow management and ability to stay current on all obligations.