What is the maximum interest rate that Apricot Lane can charge on understated payments?

According to Apricot Lane's 2025 Franchise Disclosure Document, if an audit reveals that a franchisee has understated payments to Apricot Lane, the franchisee must immediately pay the understated amount. Apricot Lane charges interest on the understated amount from the date it was due until it is paid. The interest rate is 18% per annum or the maximum rate permitted by law, whichever is lower. Additionally, if the understatement is 2% or more, the franchisee must reimburse Apricot Lane for all costs and expenses connected with the inspection or audit, including accounting and attorneys' fees.

This means that if an Apricot Lane franchisee makes a mistake or intentionally underreports revenue, they will face a financial penalty. The interest charge is meant to compensate Apricot Lane for the time value of money and the inconvenience of the underpayment. The audit cost reimbursement is designed to deter franchisees from underreporting and to cover Apricot Lane's expenses in detecting and correcting such underreporting.

Prospective Apricot Lane franchisees should ensure they have robust accounting practices and internal controls to accurately track and report all revenues. They should also be aware of the potential for significant costs if underreporting is discovered during an audit. Franchisees should clarify with Apricot Lane what constitutes the 'maximum rate permitted by law' in their specific jurisdiction to fully understand the potential interest charges.