Does Cream require franchisees to authorize automatic debiting of their accounts?
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 we debit from your account on the basis of any understatement are greater than the amounts you actually owe us, we will credit the excess against the amounts we otherwise would debit from your account during the following period.
4. TRAINING AND ASSISTANCE.
A.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, franchisees are required to authorize Cream to automatically debit their accounts for all amounts due to Cream or its affiliates. This authorization, referred to as the "EFT Authorization," allows Cream to debit the franchisee's checking, savings, or other designated account. Franchisees must sign and deliver any documents required for this EFT Authorization, which remains in effect throughout the term of the franchise 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. Franchisees are responsible for ensuring sufficient funds are available in their account to cover these withdrawals.
Cream also has the right to debit a franchisee's account under specific circumstances, such as failure to report Net Sales, denial of access to the Computer System, or unauthorized shop closure. In these cases, Cream may debit the account for 110% of the average Net Sales for the last three months of operation. If these debited amounts are later found to be less than what is actually owed, Cream will debit the account for the remaining balance. Conversely, if the debited amounts exceed the actual amount owed, Cream will credit the excess against future debits.
Furthermore, Cream may arrange for designated vendors or affiliates to collect fees and expenses associated with products and services provided to the franchisee, and then pay the vendor on the franchisee's behalf. In such cases, Cream or its affiliates may auto debit the franchisee's Transfer Account for these amounts, using the same authorization granted for royalty fees and other fees. This means that the franchisee's initial agreement to automatic debiting extends to these vendor-related expenses as well.
This mandatory electronic funds transfer (EFT) policy is a significant aspect of the Cream franchise agreement. Prospective franchisees should carefully consider the implications of granting Cream such broad access to their bank accounts, including the potential for overdraft fees or other financial repercussions if sufficient funds are not available. Franchisees should also be aware of the conditions under which Cream can debit their accounts for estimated sales figures and vendor-related expenses, and ensure they have a clear understanding of how these amounts are calculated and reconciled.