Is a Bumper Man franchisee entitled to withhold payments to the franchisor?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
- (xi) Franchisee fails to pay any Continuing Service Fees or other amounts due hereunder to Franchisor within five days after Notice of nonpayment is delivered to Franchisee, or if Franchisee or its Affiliate fails to pay any amounts due to Franchisor under any promissory note or other written instrument and fails to cure such nonpayment within the time period prescribed therein;
- (xii) Franchisee under-states Gross Sales or fails to accurately report Gross Sales or its performance of any Designated Services, and does not correct such failure within three days after Notice of such failure is delivered to Franchisee, including without limitation payment of the Non-Reported Designated Services Fee for such failure to report performance of Designated Services;
- (xiii) Franchisee fails to pay when due any income, withholding, service, sales or any other applicable taxes due on the Bumper Business' operations, unless it is in good faith contesting its liability for such taxes and has effectively stayed the enforcement of liability for such taxes.
Source: Item 23 — RECEIPTS (FDD pages 45–180)
What This Means (2025 FDD)
According to the 2025 Bumper Man Franchise Disclosure Document, a franchisee is not entitled to withhold payments. Specifically, the agreement states that failing to pay Continuing Service Fees or other amounts due to Bumper Man within five days after notice of nonpayment constitutes a breach of the agreement. Similarly, failure to pay amounts due under any promissory note or written instrument, without curing the nonpayment within the prescribed time, also constitutes a breach. These stipulations ensure that Bumper Man franchisees meet their financial obligations promptly.
Furthermore, the Bumper Man franchise agreement specifies that understating Gross Sales or failing to accurately report Gross Sales or performance of Designated Services, without correcting the failure within three days after notice, is a breach. This includes the failure to pay the Non-Reported Designated Services Fee. Additionally, failing to pay income, withholding, service, sales, or other applicable taxes when due on the Bumper Business' operations also constitutes a breach, unless the franchisee is in good faith contesting the liability for such taxes and has effectively stayed the enforcement of liability.
These provisions are typical in franchise agreements, as franchisors rely on consistent and accurate payments from franchisees to maintain the system and provide ongoing support. Franchisees should be aware that failure to meet these payment obligations can lead to termination of the franchise agreement. It is important for prospective Bumper Man franchisees to understand these financial obligations and ensure they have a plan to meet them to avoid potential default and termination of their franchise agreement.