How does Red Wagon Club designate the manner of payments?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
- All fees are imposed by and payable to us, except as otherwise noted in the table, are nonrefundable and fully earned by us upon receipt. Unless otherwise noted, we uniformly impose the fees described in the table. 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, payments to Red Wagon Club or its affiliates must be made in a manner that Red Wagon Club designates. Specifically, franchisees must authorize Red Wagon Club or a designated third party to automatically debit their Business Account for amounts due by signing an Electronic Funds Transfer Authorization, which remains effective throughout the Franchise Agreement term. Franchisees are responsible for ensuring sufficient funds are available in their Business Account to cover these withdrawals.
Franchisees are required to establish a business checking account with a vendor approved by Red Wagon Club. Each month, on a date determined by Red Wagon Club (currently the 10th of each calendar month), franchisees will remit a Balance Payment via electronic debit. This payment covers all amounts due to Red Wagon Club or its affiliates, excluding Membership Fees, and includes Program Fee payments and Brand Fund Contributions for the prior month.
Several other fees are outlined in the FDD, such as a Transfer Fee, Successor Franchise Fee, and Technology Fee. The Transfer Fee is 75% of the then-current Initial Franchise Fee, while the Successor Franchise Fee is $2,500. A Technology Fee is not currently assessed but may be in the future. Other potential fees include Mystery Shopper Fees (up to $500 per month), Speaker Approval Fees, Interest on late payments (lesser of 1.5% per month or the highest commercial contract interest rate allowed by law), Costs and Attorneys' Fees, Non-Compliance Fees ($500 per default per month), and Insufficient Funds fees ($250 each instance).
Franchisees also remit Program Fees monthly, on the 10th of each month. The Program Fee is $2,500 from the Program Fee Commencement Date through the 3rd calendar month thereafter, $5,000 for the 4th through 6th months following the Program Fee Commencement Date, and $7,500 for the 7th month and each month thereafter. Red Wagon Club will remit to the franchisee an amount equal to one-third of membership fees paid by members of the franchisee's Red Wagon Club business under Membership Agreements during the preceding month, on or before the 10th day of each calendar month.