What interest rate does Alloy charge on overdue amounts?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
| Name of Fee (1) | Amount | Date Due | Remarks |
|---|---|---|---|
| travel, lodging, meals, and wages | |||
| Insufficient Funds/Late Report Fee | $100 fee for late report/late payment, with fee increasing by $50 for each subsequent late report/late payment (up to a maximum of $250 for the fourth and any subsequent late report/late payment | On demand, if incurred | You must pay us this fee if there are not sufficient funds in your bank account to process payments owed to us and/or our affiliates or you are late in submitting reports. If you incur this fee three times in any 12 month period, we may terminate your Franchise Agreement without giving you the right to cure the default |
| Interest on Overdue Amounts | 12% per annum or the highest legal contract rate, whichever is less | Upon billing | Payable on all overdue amounts. Interest accrues from the original due date until payment is received in full |
Source: Item 6 — OTHER FEES (FDD pages 15–20)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if a franchisee has any overdue amounts, Alloy charges interest on those overdue amounts. The interest rate is 12% per annum, or the highest legal contract rate, whichever is less. This interest begins accruing from the original due date until the payment is received in full by Alloy.
This means that if an Alloy franchisee fails to pay fees or other amounts owed to Alloy on time, they will incur interest charges on the outstanding balance. The specific interest rate will depend on whether 12% per annum is lower than the highest legal contract rate allowed in the franchisee's jurisdiction. Franchisees should be aware of this policy and ensure timely payments to avoid these additional costs.
It is common practice in franchising for franchisors to charge interest on overdue amounts to incentivize timely payments and to compensate for the administrative costs and potential financial losses associated with collecting late payments. Franchisees should factor this potential cost into their financial planning and ensure they have sufficient cash flow to meet their obligations to Alloy on time.