What methods can be used to fund the Reserve Account for an Even Hotels franchise?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
13.2 Funding the Reserve Account.
(a) Timing. The Reserve Account shall be fully funded: (i) immediately in instances of fraud, suspected fraud, the occurrence of an Event of Default, or any party providing notice of termination of the Agreement; or (ii) upon three days' notice if required for any other reason.
(b) Method. The Reserve Account may be funded by all or any combination of the following: (i) one or more debits to your Settlement Account or any other accounts held by either of us or any of our respective Affiliates, at any financial institution maintained in the name of Client, any of its principals, or any of its guarantors, or if any of same are authorized signers on such account; (ii) our collection of any payments or amounts (including settlement funds) otherwise due to you; or (iii) with our consent, your delivery to us of a letter of credit issued by a financial institution acceptable to us and in a form satisfactory to us.
(c) Holding and Return of Funds. Any Reserve Account will be held by us for the greater of ten (10) months after termination of the Agreement or for such longer period of time as is consistent with our liability for your Card transactions and Chargebacks in accordance with Card Organization Rules, at which time, we will return all remaining amounts in the Reserve Account to you.
We will hold funds pursuant to this Section 13.2 in master account(s) with your funds allocated to separate sub accounts.
Unless specifically required by law, you shall not be entitled to interest on any funds held by us in a Reserve Account.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, the Reserve Account can be funded through several methods. The timing of funding depends on the situation. In cases of fraud, suspected fraud, an Event of Default, or notice of termination, the account must be funded immediately. Otherwise, funding is required upon three days' notice.
Specifically, the Reserve Account may be funded by one or a combination of the following methods: debits to the franchisee's Settlement Account or any other accounts held by either the franchisor or its affiliates at any financial institution maintained in the name of the franchisee, its principals, or its guarantors, especially if they are authorized signers on the account. It can also be funded by the franchisor collecting any payments or amounts (including settlement funds) otherwise due to the franchisee. Finally, with the franchisor's consent, the franchisee can deliver a letter of credit issued by a financial institution acceptable to the franchisor in a form satisfactory to them.
Even Hotels will hold the funds in the Reserve Account for at least ten months after the termination of the agreement or longer if required by Card Organization Rules due to potential liabilities for card transactions and chargebacks. The funds are held in master accounts with sub-accounts allocated to each franchisee. Unless required by law, franchisees are not entitled to interest on the funds held in the Reserve Account. These funds can be used by Even Hotels to cover Servicers Fees, Third Party Based Fees, Chargebacks, and other amounts arising in connection with the franchise agreement.