What is the Hck Hot Chicken franchisee's responsibility regarding maintaining a minimum balance in their designated bank account?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
t that the software is not functioning, or this feature is not available, Franchisee shall prepare and submit the required reports manually.
4.6 EFT and Pre-Authorized Payments.
4.6.1 Franchisee, at Franchisee's sole cost and expense, shall instruct its bank to paythe amount of its Continuing Royalty, Brand Fund Contribution and other fees directly to Franchisor from Franchisee's account, by electronic funds transfer or such other automatic payment mechanism which Franchisor may designate ("EFT") and upon the terms and conditions set forth in the HCK Hot Chicken Brand Standards Manual, and promptly upon Franchisor's request, Franchisee shall execute or re-execute and deliver to Franchisor such pre-authorized check forms and other instruments or drafts required by Franchisor's bank, payable against Franchisee's bank account, to enable Franchisor to draw Franchisee's Continuing Royalty, Brand Fund Contributions and other sums payable under the terms of this Agreement. Franchisee must at all times during the term of this Agreement (including any renewal terms) maintain at least one credit card account in good standing and with a minimum available credit line of $10,000.00 and complete the credit card authorization form which allows Franchisor to charge the credit card for any past due amounts owed to Franchisor or an approved supplier in the event an EFT payment is unsuccessful. Franchisor's current form of EFT authorization and credit card authorization is attached to the Franchise Disclosure Document in Exhibit I. Franchisee shall also, in addition to those terms and conditions set forth in the HCK Hot Chicken Brand Standards Manual, maintain a single bankaccount for such payments and shall maintain such minimum balance in such account as Franchisor may reasonably specify from time to time. Franchisee shall not alter or
close such account except upon Franchisor's prior written approval.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Hck Hot Chicken Franchise Disclosure Document, franchisees must maintain a single bank account for electronic fund transfer (EFT) payments to Hck Hot Chicken for continuing royalty fees, brand fund contributions, and other fees. The franchisee must maintain whatever minimum balance Hck Hot Chicken reasonably specifies from time to time in that account. The franchisee cannot alter or close this account without prior written approval from Hck Hot Chicken.
In addition to maintaining a minimum balance, the franchisee must also maintain at least one credit card account in good standing with a minimum available credit line of $10,000. The franchisee must complete a credit card authorization form allowing Hck Hot Chicken to charge the credit card for any past due amounts owed to Hck Hot Chicken or an approved supplier if an EFT payment is unsuccessful. Hck Hot Chicken includes its current forms for EFT authorization and credit card authorization as exhibits to the Franchise Disclosure Document.
Failure to strictly implement the EFT system according to Hck Hot Chicken's instructions constitutes a material default of the Franchise Agreement. This means Hck Hot Chicken could potentially terminate the agreement if the franchisee does not comply with these financial requirements. This level of control over franchisee bank accounts is not uncommon in franchising, as it ensures smooth payment processing and protects the franchisor's revenue stream.