Can the Hck Hot Chicken franchisor establish credit terms for franchisees?
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, maint
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Hck Hot Chicken Franchise Disclosure Document, Hck Hot Chicken franchisees are required to maintain a credit card account. Specifically, franchisees must maintain at least one credit card account in good standing with a minimum available credit line of $10,000 during the entire term of the agreement, including any renewal terms. Franchisees must also 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 electronic funds transfer (EFT) payment is unsuccessful.
Furthermore, Hck Hot Chicken requires franchisees to authorize their bank to directly pay Continuing Royalty fees, Brand Fund Contributions, and other fees to Hck Hot Chicken via electronic funds transfer (EFT) or another automatic payment method designated by Hck Hot Chicken. Franchisees must also provide pre-authorized check forms or drafts to enable Hck Hot Chicken to draw these payments from the franchisee's bank account. Franchisees must maintain a single bank account for these payments and keep a minimum balance as specified by Hck Hot Chicken. Altering or closing this account requires prior written approval from Hck Hot Chicken.
These requirements ensure that Hck Hot Chicken has a mechanism to collect fees and payments from franchisees in a timely manner, reducing the risk of late or missed payments. The credit card authorization acts as a backup payment method in case of EFT failures, providing additional security for Hck Hot Chicken. Franchisees should be aware of these financial obligations and ensure they can meet these requirements to avoid defaulting on the franchise agreement. The specific terms and conditions for EFT and credit card payments are detailed in the Hck Hot Chicken Brand Standards Manual and Exhibit I of the Franchise Disclosure Document.