What is the bank's responsibility regarding checks or EFTs drawn on the Browns Chicken franchisee's account?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
st or any other indebtedness.
E. Expenses of Enforcement.
Franchisee shall be obligated to reimburse Brown for Brown's costs and expenses (including attorneys' fees) incurred by Brown in the enforcement by Brown of the provisions of this Agreement as a consequence of Franchisee's failure to perform same.
F. Bank Draft Plan.
(1) Franchisee shall make payments of the royalty fee, Advertising Fund contributions, and all other payments due Brown through a Bank Draft Plan on a bank account Franchisee is required to establish and maintain for the purpose of making payments to Brown. Franchisee shall execute such documents as may be required from time to time by Brown to permit Brown to withdraw from Franchisee's general operating checking
account the amounts due Brown. The form authorizing the bank draft is attached as Rider C.
- (2) In the event Franchisee fails to submit required reports to Brown, Brown will withdraw an estimated amount for the royalty fee and Advertising Fund contribution, based on the average sales for the last ten (10) reported weeks. If Franchisee fails to report sales for two (2) consecutive weeks, Brown will withdraw an estimated amount for the royalty fee and Advertising Fund contribution, based on the average sales, plus ten percent (10%) for the last ten (10) reported weeks.
- (3) 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 Brown's prior written approval.
- (4) In the event any electronic bank draft is declined, dishonored, or refused, due to insufficient funds, Franchisee shall pay the Brown a processing fee of Fifty Dollars ($50.00). Franchisee shall also immediately remedy the reason the electronic bank draft was dishonored, and notify Brown that the electronic bank draft will be honored.
- (5) In the event there are other invoices for miscellaneous items due Brown (e.g., equipment, uniform purchasing, product transfers, etc.) over 30 days past due, Brown may withdraw the amounts due from Franchisee's bank account, through Franchisee's Bank Draft Plan.
G. Document Name Change Fee.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, the franchisee is required to authorize their bank to honor checks or electronic fund transfers (EFTs) drawn by and payable to Browns Chicken, LLC. This authorization is formalized through a Bank Draft Authorization Form, which is included as Rider C to the franchise agreement. The franchisee must establish and maintain a bank account specifically for making payments to Browns Chicken. Browns Chicken is permitted to withdraw payments for royalty fees, advertising fund contributions, and other amounts owed from the franchisee's account through this Bank Draft Plan.
If a franchisee fails to submit required sales reports, Browns Chicken can withdraw an estimated amount for royalty and advertising fees based on the average sales of the previous ten reported weeks. If the franchisee fails to report sales for two consecutive weeks, Browns Chicken will estimate the amount due based on the average sales plus a 10% increase. The franchisee is not allowed to change their banking relationships or account numbers without prior written approval from Browns Chicken.
In the event that an electronic bank draft is declined, dishonored, or refused due to insufficient funds, the franchisee is responsible for paying Browns Chicken a processing fee of $50.00. The franchisee must also immediately correct the issue that caused the draft to be dishonored and notify Browns Chicken that the draft will be honored. Browns Chicken also has the right to withdraw amounts due for miscellaneous invoices (such as equipment, uniforms, or product transfers) that are over 30 days past due from the franchisee's bank account through the Bank Draft Plan.