How are the fund amounts withdrawn from Chocolate Fish Coffee franchisees?

According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, the Brand Fund contribution, which is 1% of gross sales, is withdrawn via electronic wire transfer from the franchisee's designated bank account. This process is detailed further in Item 11 of the FDD. Gross sales are defined as the total dollar amount of all sales generated through the business, including payments for services or products sold, whether for cash or credit. However, gross sales do not include bona fide refunds to customers, sales taxes collected, the sale of used equipment not in the ordinary course of business, or sales of prepaid cards or similar products; the redemption of such cards or products will be included in gross sales.

Chocolate Fish Coffee requires franchisees to pay royalty fees and other amounts due via preauthorized bank draft but retains the right to require an alternative payment method. All fees are payable to and collected by Chocolate Fish Coffee, except for local marketing spend and software subscription charges. These fees are generally non-refundable and uniform for all franchisees, although Chocolate Fish Coffee reserves the right to change, waive, or eliminate fees for any franchisee.

For a prospective Chocolate Fish Coffee franchisee, this means that 1% of their gross sales will be automatically debited from their bank account to cover the Brand Fund contribution. It is important for franchisees to understand what constitutes 'gross sales' as defined in the franchise agreement to accurately calculate and anticipate these deductions. Franchisees should also be prepared for the possibility of Chocolate Fish Coffee changing the payment method for these fees, although preauthorized bank drafts are the current standard.