What is the penalty for insufficient funds in a Closet Storage Concepts franchisee's bank account?
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.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Closet Storage Concepts requires franchisees to participate in an electronic funds transfer program for royalty and other payments. The FDD does not explicitly state the penalty for insufficient funds.
However, the agreement stipulates that franchisees must provide all necessary banking documents to facilitate electronic transfers and immediately notify Closet Storage Concepts of any changes to their banking relationships. This suggests that maintaining a functional bank account for payments is a strict requirement.
While the document does not specify a monetary penalty, failure to cooperate with the electronic funds transfer program or to make timely payments could constitute a breach of the franchise agreement. A breach could lead to further action from the franchisor, potentially including termination of the franchise agreement.
Prospective franchisees should clarify with Closet Storage Concepts what specific penalties or fees are associated with failed electronic fund transfers due to insufficient funds to fully understand the financial implications.