How will FSI withdraw funds from a Fat Shack franchisee's bank account for ACH Payments?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee revokes or cancels the Authorization Agreement executed by Franchisee and provided to FSI pursuant to Section 5.4, or takes other steps to prevent FSI from obtaining payment of any amounts due under this Agreement, or otherwise, by electronic funds transfer of funds from Franchisee's bank account to FSI's bank account, and fails to provide a valid replacement Authorization Agreement within five days after receiving notice of such matter.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, franchisees are required to authorize electronic fund transfers for payments. Specifically, Fat Shack franchisees must sign an Authorization Agreement that allows FSI to directly withdraw funds from the franchisee's bank account. This method is used for recurring payments like royalties and marketing fees.
If a Fat Shack franchisee revokes or cancels this Authorization Agreement, or takes steps to prevent FSI from obtaining payment through electronic funds transfer, it constitutes a breach of the franchise agreement. The franchisee then has a short window of five days after receiving notice to provide a valid replacement Authorization Agreement. Failure to do so can result in further action from Fat Shack.
This reliance on electronic fund transfers ensures that Fat Shack receives timely payments of royalties and other fees. It also places a responsibility on the franchisee to maintain a valid authorization and sufficient funds in their account to cover these payments. Franchisees should be aware of these requirements and the potential consequences of failing to comply.