If an Aerus franchisee's payment is overdue, what is the interest rate applied to the amount owed?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall pay to Company all fees, payments and deposits set forth in Schedule 3 attached hereto and required elsewhere in this Agreement (the remittance of each, a "Payment") in the amounts, at the time, and in the manner described in this Agreement or the Policies and Procedures or elsewhere in the Manuals. Each Payment to be made to Company must be made free and clear at the time, and in the manner, specified in this Agreement, without deduction or offset. TIME IS OF THE ESSENCE with respect to all Payments to be made. All unpaid obligations under this Agreement will bear interest from the date due until the date of receipt by Company, at one and one-half percent (1.5%) per month, or the maximum rate allowed by applicable law, whichever is less.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, any unpaid financial obligations from a franchisee will incur interest. The interest is calculated from the date the payment was originally due until the date Aerus receives the payment. The interest rate applied is one and one-half percent (1.5%) per month, which equates to 18% annually.
However, the agreement specifies a condition: the 1.5% monthly interest rate, or 18% annually, is applied only if it is less than the maximum rate allowed by applicable law. This means that if local or state laws prescribe a lower maximum interest rate, that lower rate will be used instead. This clause protects the franchisee from excessively high interest charges that might violate usury laws.
This is a fairly standard clause in franchise agreements. Franchisees should be aware of these terms and ensure timely payments to avoid incurring interest charges. It is also important to understand the applicable laws in their specific location to know what the maximum allowable interest rate would be, in case it is lower than the rate specified in the agreement.