How is interest calculated on the Secured Promissory Note for a Bath Tune Up franchise?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of South Dakota, except that for purposes of the usury laws (and determining the maximum rate of interest allowable), this Note shall be governed by and construed and enforced in accordance with the laws of the state of Obligor's residence.
In Item 6, the maximum interest allowed in California is 10% per annum. Item 6 is modified in California to comply with California law and charging a maximum of 10% per annum.
Source: Item 23 — RECEIPTS (FDD pages 52–222)
What This Means (2025 FDD)
The 2025 Bath Tune Up Franchise Disclosure Document (FDD) does not provide explicit details on how the interest is calculated on the Secured Promissory Note. However, it does state that the note is governed by the laws of the franchisee's state of residence for usury laws and determining the maximum allowable interest rate. This means the interest rate calculation will be subject to the specific regulations of the state where the franchisee resides.
For California franchisees, the FDD mentions that Item 6 is modified to comply with California law, charging a maximum interest rate of 10% per annum. This indicates that in California, the interest rate on any financing provided by Bath Tune Up will not exceed this limit. However, the exact method of calculating interest (e.g., simple, compound, fixed, or variable) is not specified in the provided excerpts.
Prospective Bath Tune Up franchisees should carefully review Exhibit J, which is the Secured Promissory Note, and consult with a financial advisor and attorney to fully understand the terms and conditions, including how the interest is calculated, any potential fees, and the implications of default. It is also important to understand how the laws of their specific state will affect the interest rate and other terms of the note.