What authorization must a Red Wagon Club franchisee sign to allow for automatic debits?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
You must make all payments due us or our affiliates in the manner we designate, and you must authorize us and/or any third party we designate to debit your Business Account (as defined below) automatically for any or all amounts due to us or our affiliates by signing an Electronic Funds Transfer Authorization (the "EFT Authorization"), which is attached as Attachment C to the Franchise Agreement. Such EFT Authorization shall remain in full force and effect during the term of the Franchise Agreement. You must ensure that funds are readily available in your Business Account to cover our withdrawals.
You must set up a business checking account with our approved vendor, if any, or a vendor we otherwise approve (your "Business Account"). Each month, on a date we determine (currently the 10th day of each calendar month), you will remit to us via electronic debit an amount equal to all payments due from you to us or our affiliates (other than Membership Fees), including but not limited to Program Fee payments and Brand Fund Contributions for the prior month (the "Balance Payment").
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, a franchisee must sign an Electronic Funds Transfer Authorization, referred to as the "EFT Authorization," to allow Red Wagon Club to debit their business account automatically for amounts owed to them or their affiliates. This authorization is included as Attachment C to the Franchise Agreement and must remain in effect throughout the term of the agreement.
This requirement means that as a Red Wagon Club franchisee, you will need to establish a business checking account with a vendor approved by Red Wagon Club. Each month, Red Wagon Club will electronically debit this account for payments due, including Program Fees and Brand Fund Contributions. The standard due date is the 10th of each calendar month.
It is crucial for a franchisee to ensure that sufficient funds are available in the designated business account to cover these withdrawals. The FDD also mentions that Red Wagon Club may debit your bank account automatically for service charges and interest. Failing to maintain adequate funds can result in additional fees, such as the Insufficient Funds fee of $250 for each instance where funds are not available when Red Wagon Club attempts to debit the account. Red Wagon Club may attempt to debit the account until funds are available, but no more than once every 5 days, and a fee will be charged each time the funds are insufficient.