Does Red Wagon Club control member billing and collections services?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
6.C. MEMBERSHIP FEE.
Franchisor or its affiliate will collect all membership fees from Members due under then-applicable Membership Agreements for Franchisee's RWC Business. Each calendar quarter, Franchisor will remit to Franchisee a quarterly membership fee (the "Membership Fee") equal to one-third (1/3) of the membership fees paid by Members of Franchisee's RWC Business to Franchisor or its affiliates under their Membership Agreements for the foregoing quarter. At Franchisor's sole discretion, Franchisor may elect to require Franchisee to directly enter into Membership Agreements with Members, in which case Franchisee would be responsible for the collection of membership fees under Membership Agreements and would pay Franchisor the quarterly Membership Fee in the amount of two-thirds (2/3) of the membership fees payable by Members of Franchisee's RWC Business under their Membership Agreements for the foregoing quarter.
For so long as Franchisor or its affiliate collects membership fees from Members, the Membership Fee will be remitted to a business checking account that Franchisee must set up in order to receive payments (Franchisee's "Business Account"). Franchisor may designate certain banks and financial institutions at which such Business Account must be held. Franchisee shall not bill or invoice Members without the prior written consent of Franchisor. Any payment received by Franchisee from Members shall be deemed money received in trust for Franchisor or its affiliate's benefit and shall be immediately forwarded to Franchisor or its affiliate, properly endorsed to Franchisor or its affiliate, as necessary.
6.D. BILLING AND COLLECTION.
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, the franchisor or its affiliate typically handles the collection of membership fees from the members of a franchisee's Red Wagon Club business. Specifically, the franchisor collects fees due under the membership agreements. Then, each calendar quarter, the franchisor remits a 'Membership Fee' to the franchisee, which is equal to one-third (1/3) of the membership fees paid by the members for that quarter.
However, there is an exception. Red Wagon Club retains the option to require the franchisee to directly enter into membership agreements with members. In this case, the franchisee would then be responsible for collecting the membership fees. The franchisee would then pay Red Wagon Club a quarterly membership fee equal to two-thirds (2/3) of the membership fees collected from the members for that quarter.
For as long as Red Wagon Club or its affiliate collects membership fees, the membership fee will be sent to a business checking account that the franchisee is required to set up. Red Wagon Club may also designate the specific banks or financial institutions where this business account must be held. The franchisee is prohibited from billing or invoicing members without first obtaining written consent from Red Wagon Club. Any payments that the franchisee receives directly from members are considered to be held in trust for Red Wagon Club or its affiliate and must be immediately forwarded to them.