What is the dependency between the Franchise Agreement and the EFT Authorization Agreement for Cinch I.T.?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
I (We, if joint account) the undersigned hereby authorize Cinch Franchise, LLC, a limited liability company, with principal offices at 27 West Mountain Street, Worcester, Massachusetts 01606, to initiate electronic transfer of funds out of my (our) primary Checking or Savings selected below at the Financial Institution indicated, for payment of Royalties or other amounts which I may owe Cinch Franchise, LLC. I (We) acknowledge that the origination of Automated Clearing House (ACH) transactions to my (our) account must comply with the provisions of the United States law. All costs and expenses, including any resulting from the dishonor by my (our) bank of any electronic funds transfer, shall be my (our) sole responsibility. This authorization is irrevocable and shall remain in effect until the termination or expiration of the underlying Franchise Agreement with Cinch Franchise, LLC. If I (we) do not have enough money in my (our) account to cover the transfer or if my (our) Financial Institution for any other reason refuses to honor a transfer, I (we) will separately pay for the charges I (we) owe under my (our) Franchise Agreement with Cinch Franchise, LLC**.**
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to the 2024 Cinch I.T. Franchise Disclosure Document, the Electronic Funds Transfer (EFT) Authorization Agreement is directly tied to the Franchise Agreement. The EFT Authorization Agreement allows Cinch Franchise, LLC to electronically transfer funds from the franchisee's account for royalty payments or other amounts owed to Cinch Franchise, LLC.
The authorization remains in effect until the termination or expiration of the underlying Franchise Agreement. This means that the franchisee is obligated to allow Cinch I.T. to make these electronic transfers as long as the Franchise Agreement is active. If a franchisee's bank refuses to honor a transfer due to insufficient funds or any other reason, the franchisee is still responsible for separately paying the owed charges under the Franchise Agreement.
This arrangement ensures that Cinch I.T. has a reliable method for receiving payments from franchisees. However, it also places a responsibility on the franchisee to maintain sufficient funds in the designated account to cover these transfers. The franchisee bears the risk of any dishonor fees or penalties resulting from failed transfers, highlighting the importance of careful financial management.