What is the Cream franchisee's obligation regarding funds in the designated account for withdrawals?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
tedness to us. We and our affiliates may set off any amounts you or your owners owe us or our affiliates against any amounts we or our affiliates owe you or your owners.
G. METHOD OF PAYMENT.
You must make all payments due under this Agreement in the manner we designate from time to time. We may also direct you to make some or all of the payments under this Agreement to our designee or affiliate. You authorize us to debit your checking, savings, or other account automatically for all amounts due to us or our affiliates (the "EFT Authorization"). You agree to sign and deliver to us any documents we require for such EFT Authorization. Such EFT Authorization shall remain in full force and effect during the Term. We will debit the account you designate for these amounts on their due dates (or the subsequent business day if the due date is a national holiday or a weekend day). You agree to ensure that funds are available in your designated account to cover our withdrawals. If the amounts that we debit from your account are greater than the amounts you actually owe us, we will credit the excess against the amounts we otherwise would debit from your business account on the next payment due date. We may change the timing, frequency, and intervals of any payments from time to time, but with no less than 30 days' prior written notice to you. All amounts payable by you or your owners to us or our affiliates must be in United States Dollars ($USD).
If you fail to report Net Sales, we cease to have access to your Computer System, or your Shop is closed without our authorization for any period of time, then for any fees under this Agreement which are calculated based on Net Sales, we may debit your account for 110% of the average Net Sales for the last three months of operations of your Shop. If the amounts that we debit from your account on the basis of any understatement are less than the amounts you actually owe us once we have determined the true and correct Net Sales, we will debit your account for the balance on the day we specify. If the amounts that w
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, franchisees must ensure sufficient funds are available in their designated account to cover withdrawals made by Cream. Cream is authorized to debit the franchisee's checking, savings, or other account automatically for all amounts due to Cream or its affiliates through an EFT Authorization. This authorization remains in effect throughout the term of the agreement. Cream will debit the designated account on the due dates, or the subsequent business day if the due date falls on a national holiday or weekend. If Cream debits an amount greater than what is owed, the excess will be credited against the next payment due. Cream may change the timing, frequency, and intervals of payments with no less than 30 days' prior written notice. All payments must be in United States Dollars ($USD).
If a Cream franchisee fails to report net sales, if Cream ceases to have access to the franchisee's computer system, or if the shop is closed without authorization, Cream may debit the franchisee's account for 110% of the average net sales for the last three months of operation. If this debit is less than the amount actually owed, Cream will debit the account for the balance. Conversely, if the debit is greater than the amount owed, Cream will credit the excess to the franchisee's account during the following period.
This arrangement provides Cream with a direct and efficient method for collecting payments, but it places a significant responsibility on the franchisee to maintain adequate funds in the designated account. Franchisees need to carefully track their financial obligations to Cream and ensure their account balance is sufficient to avoid potential issues such as overdraft fees or penalties. The ability of Cream to debit 110% of average net sales in certain situations also highlights the importance of accurate and timely reporting of sales data by the franchisee.