Is there a maximum interest rate Aw can charge on late payments?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
us (once we have determined the true and correct amount of Gross Revenue), we will transfer from your account the balance of the royalty and Marketing Fund contribution due or we will credit the excess against the next transfer for royalty and Marketing Fund contribution due, as applicable.
- 10.6 Interest on Late Payments. To encourage prompt payment of all amounts due to us and to cover the costs and expenses involved in handling and processing late payments, you will pay a late payment charge equal to the greater of (i) One Hundred Fifty Dollars ($150.00) or (ii) one and one-half percent (1 ½%) per month on all payments due to us during the period of time said payments are due and unpaid, but no more than the highest interest rate permitted by law. (You acknowledge that the inclusion of this Paragraph in this Agreement does not mean we agree to accept or condone late payments, nor does it indicate that we have any intention to extend credit to, or otherwise finance your operation of the Papa Ray's Pizza Restaurant.) We shall have the right to transfer from your bank account des
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw charges interest on late payments to encourage prompt payment and cover handling costs. The late payment charge is the greater of $150 or 1.5% per month on the unpaid amount. However, the agreement specifies that the interest rate will not exceed the highest interest rate permitted by law.
This means that while Aw has a set rate for late payments, it will adjust that rate if usury laws or other regulations set a lower maximum interest rate. This protects the franchisee from potentially excessive charges while ensuring Aw is compensated for late payments within legal limits.
Prospective franchisees should be aware of this late payment policy and ensure they understand their obligations for timely payments to avoid incurring these charges. It is also important to understand what the legally permitted maximum interest rate is in their specific jurisdiction, as this could impact the actual amount charged on late payments.