For a Floyds 99 franchise, does termination of the funds transfer authorization relieve the franchisee of their obligation to make payments to the franchisor?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
The undersigned depositor ("Franchisee") agrees to electronic funds transfer from Franchisee's account designated below to the designated account(s) of Floyd's 99 Franchising, LLC ("Franchisor") for payment of Royalties, National Marketing Contributions, and other obligations owed to Franchisor related to Franchisee's FLOYD'S 99 franchise(s).
Franchisee authorizes and requests the financial institution (the "Bank") to accept the payment entries presented to the Bank by Franchisor, and to deduct them from the Franchisee's account without responsibility for the correctness of these payments.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
The 2025 Floyds 99 Franchise Disclosure Document outlines the electronic funds transfer authorization in Exhibit IV to the Franchise Agreement. According to this authorization, the franchisee agrees to allow electronic funds transfers from their designated account to Floyds 99 Franchising, LLC for royalties, national marketing contributions, and other obligations. The franchisee authorizes their bank to accept these payments presented by Floyds 99.
However, the excerpt does not explicitly state whether terminating the electronic funds transfer authorization relieves the franchisee of their obligation to make payments. It only describes the mechanism for payment. It is common practice in franchising that even if a specific payment method is terminated, the underlying obligation to pay still exists.
Therefore, a prospective Floyds 99 franchisee should seek clarification from the franchisor regarding the implications of terminating the electronic funds transfer authorization. Specifically, they should ask whether alternative payment methods would be required and whether the obligation to pay royalties, marketing contributions, and other fees continues even if the electronic funds transfer is terminated.