What is the maximum interest rate B Bops can charge on past due amounts?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
deemed past due. If any payment is past due, Franchisee agrees to pay Company (or such affiliate), in addition to the past due amount, a late fee of Two Hundred Dollars ($200) plus interest on the past due amount at the rate of one and one-half percent (1-1/2%) per month, or the maximum rate permitted by the law of the state in which the Franchise is located, whichever may be less, commencing as of the due date and continuing until Company has received payment in full.
- F. Books and Records. Franchisee agrees to maintain true and correct books and records in which shall be recorded all gross sales and which shall be prepared in accordance with generally accepted accounting principles and utilizing such bookkeeping forms and employing such bookkeeping procedures as Company may from time to time direct.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to B Bops' 2025 Franchise Disclosure Document, if a franchisee's payment is past due, B Bops can charge interest on the past due amount. The interest rate is the lesser of one and one-half percent (1-1/2%) per month or the maximum rate permitted by the law of the state in which the franchise is located. In addition to interest, B Bops also charges a late fee of $200.
This means that a B Bops franchisee could face significant financial penalties for late payments. The 1.5% monthly interest rate equates to an annual interest rate of 18%, which is substantially higher than typical bank lending rates. The franchisee will be responsible for paying this interest from the due date until the payment is received in full by B Bops.
It is important to note that the interest rate charged by B Bops is capped at the maximum rate allowed by state law. This protects the franchisee in states with lower usury limits. However, franchisees should still be aware of the potential for high interest charges and make every effort to pay on time to avoid these penalties. Franchisees should consult with a financial advisor to understand the implications of these late payment terms.