What rights does the bank have regarding checks or EFTs drawn on the Browns Chicken franchisee's account?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
r 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 disho
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 participate in a Bank Draft Plan. This plan mandates that the franchisee authorize Browns Chicken to withdraw payments for royalty fees, advertising fund contributions, and other dues directly from the franchisee's designated bank account. This is facilitated through a form, Rider C, which authorizes the bank to honor these withdrawals.
In cases where the franchisee fails to submit required reports, Browns Chicken is permitted to withdraw an estimated amount for royalty and advertising fees. This estimation is based on the average sales of the last ten reported weeks. If the franchisee neglects to report sales for two consecutive weeks, Browns Chicken will add an additional 10% to the estimated withdrawal amount.
The franchisee is restricted from altering their banking relationships without prior written approval from Browns Chicken, including changes to the account number or the bank itself. If an electronic bank draft is declined due to insufficient funds, the franchisee must pay a $50 processing fee to Browns Chicken and immediately ensure that the draft will be honored. Additionally, Browns Chicken reserves the right to withdraw amounts due for miscellaneous invoices, such as equipment or uniform purchases, if they are over 30 days past due.