Can Closet Storage Concepts change the required method of payment for royalties?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall participate in Franchisor's electronic funds transfer program under which Franchisor automatically deducts the weekly royalty and other payments owed to Franchisor under this Agreement from Franchisee's bank account.
Before opening, Franchisee shall sign and give to Franchisor's bank all documents necessary to effectuate this program.
Franchisee shall immediately notify Franchisor of any change in Franchisee's banking relationship, including changes in account numbers.
Franchisor may require that Franchisee execute its then-current form of electronic funds transfer agreement, a copy of which is attached hereto as Exhibit 12.
Franchisor reserves the right to require Franchisee to submit all payments due to Franchisor or its affiliates arising out of or related to the Franchised Business in any form or manner Franchisor prescribes.
All weekly payments required under this section shall be due and deducted from Franchisee's bank account on Monday of each week on the receipts for the preceding week or such other day as Franchisor mandates.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, the franchisor has the right to modify the required method of royalty payments. The FDD states that Closet Storage Concepts franchisees must participate in an electronic funds transfer program where the franchisor automatically deducts weekly royalties and other payments from the franchisee's bank account. Franchisees must provide the necessary documentation to facilitate this program before opening their business and must notify Closet Storage Concepts of any changes to their banking relationship.
Closet Storage Concepts retains the authority to require franchisees to use any payment method they prescribe for all payments due to the franchisor or its affiliates. Weekly payments are due and deducted from the franchisee's bank account on Mondays for the preceding week's receipts, or on another day mandated by Closet Storage Concepts.
This clause gives Closet Storage Concepts significant flexibility to change payment methods as they see fit. For a prospective franchisee, this means they must be prepared to adapt to any payment method mandated by Closet Storage Concepts during the term of the franchise agreement. It is important to maintain open communication with Closet Storage Concepts regarding banking information and to be prepared for potential changes in payment procedures.