What constitutes a material default for an Apricot Lane franchisee regarding payments?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
Further, FRANCHISEE acknowledges that its failure to pay all amounts when due shall constitute a material default for which FRANCHISOR may (but is not obligated to) terminate this Agreement.
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- If an inspection or audit should reveal that any payments due to FRANCHISOR have been understated in any report to FRANCHISOR, then FRANCHISEE shall immediately pay to FRANCHISOR the amount understated upon demand, in addition to interest from the date such amount was due until paid, at the rate of eighteen percent (18%) per annum or the maximum rate permitted by law, whichever is lower. If an inspection or audit discloses an understatement in any report of two percent (2%) or more, FRANCHISEE shall, in addition, reimburse FRANCHISOR for any and all costs and expenses connected with the inspection or audit (including, without limitation, reasonable accounting and attorneys' fees). The foregoing remedies shall be in addition to any other remedies FRANCHISOR may have.
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- FRANCHISEE acknowledges that nothing contained herein constitutes FRANCHISOR's agreement to accept any payments after same are due or a commitment by FRANCHISOR to extend credit to or otherwise finance FRANCHISEE's operation of the Franchised Business. Further, FRANCHISEE acknowledges that the failure to pay any amounts or submit statements of Gross Revenue when due constitute a material default for which FRANCHISOR may (but is not obligated to) terminate this Agreement, as provided in Section 19 hereof.
D. Finance Charges and Late Fees
All Royalty payments, advertising contributions, and all other amounts due from FRANCHISEE to FRANCHISOR shall bear interest after the due date at eighteen percent (18%) per annum or the highest applicable legal rate, whichever is lower, for open account business credit. FRANCHISEE shall be required to pay a late fee of Five Dollars ($5.00) per day for each day that any royalties or other amounts due under this Agreement are not paid after the due date and for each day that any statement of Gross Revenue, financial statement or other report by FRANCHISEE required by this Agreement is not submitted after the due date. The provisions of this paragraph shall not constitute agreement by FRANCHISOR to accept such payments or statements after same are due or a commitment by FRANCHISOR to extend credit to, or otherwise finance FRANCHISEE's operation of, the Franchised Business.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to the 2025 Apricot Lane FDD, failure to pay amounts when due constitutes a material default. Specifically, if an Apricot Lane franchisee fails to pay any amounts or submit statements of Gross Revenue when due, Apricot Lane has the right to terminate the franchise agreement, although they are not obligated to do so.
Additionally, if an inspection or audit reveals that payments due to Apricot Lane have been understated in any report, the franchisee must immediately pay the understated amount upon demand. This payment includes interest from the date the amount was due until it is paid, calculated at a rate of eighteen percent (18%) per annum or the maximum rate permitted by law, whichever is lower.
Furthermore, if the understatement in any report is two percent (2%) or more, the Apricot Lane franchisee will also be responsible for reimbursing Apricot Lane for all costs and expenses associated with the inspection or audit, including reasonable accounting and attorneys' fees. These remedies are in addition to any other remedies Apricot Lane may pursue. Franchisees are also subject to a late fee of $5.00 per day for each day royalties or other amounts are not paid after the due date.