What is the Ledgers franchisee's obligation regarding the Automatic Bank Draft Authorization?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
Recurring fees: You are responsible for providing a monthly Royalty Report to us. The Royalty Report is due on the 10th day following the end of each month. The Royalty Report is used to calculate your Royalty Payments owed to us. Your Royalty Payments are due on the same date. You will execute an Automatic Bank Draft Authorization on a form substantially similar to that in Schedule 2. We will draft your Royalty Payment on the 10th day of each month or as soon thereafter as they are processed by us.
Other fees: We will provide an invoice to you for other fees incurred. Payment is due upon receipt. We will draft your account on the same date, or as soon thereafter as the draft is processed by us. We reserve the right to deduct monies that you owe to us from any monies that we pay to you.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Ledgers Franchise Disclosure Document, franchisees are required to execute an Automatic Bank Draft Authorization. This authorization allows Ledgers to draft royalty payments from the franchisee's account on the 10th day of each month, or as soon as the payments are processed. The specific form for this authorization is detailed in Schedule 2 of the Franchise Agreement.
This requirement ensures that Ledgers can collect royalty payments in a timely and consistent manner. For the franchisee, it means they must maintain sufficient funds in their designated bank account to cover the royalty payments. Failing to do so can result in insufficient funds fees.
In addition to royalty payments, Ledgers also reserves the right to draft the franchisee's account for other fees incurred, with payment due upon receipt of an invoice. This provides Ledgers with a mechanism to collect various fees beyond just royalties, streamlining the payment process. Franchisees should be aware of these automatic draft authorizations and ensure they understand all the fees they are responsible for to avoid any penalties or disruptions.