What interest rate does Baya Bar charge on overdue amounts?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
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| (1) | (2) | (3) | (4) |
|---|---|---|---|
| Fees (1) | Amount | Due Date | Remarks |
| Pre-Opening Training (For New or Replacement Employees) | Our then-current per session training fee, plus expenses Current per session training fee = $3,000 | Before Training | We will train up to three people at no additional charge. If you request that we provide our pre-opening training program to any additional employees, or to new or replacement employees during the term of your Franchise Agreement, you must pay our training fee as well as the trainees' expenses, including travel, lodging, meals and wages. |
| Additional Onsite Training/Remedial Training | Our then-current per diem rate per trainer, plus expenses Current per diem rate = $600 | When billed | If you request that we provide additional training or support at your Shop, or if as the result of an inspection or quality assurance audit we believe that remedial training is necessary, you must pay our daily fee for each trainer we send to your Shop, and you must reimburse each trainer's expenses, including travel, lodging and meals. |
| Interest | 18% per annum or the highest interest rate allowed by applicable law, whichever is less | On demand | Interest may be charged on all overdue amounts. |
Source: Item 6 — OTHER FEES (FDD pages 11–16)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, if a franchisee has any overdue amounts, Baya Bar may charge interest. The interest rate is 18% per annum, or the highest interest rate allowed by applicable law, whichever is less. This interest accrues from the original due date until the payment is received in full. A footnote provides additional context regarding the maximum interest rate in California, which is 10% annually.
For a prospective Baya Bar franchisee, this means that failing to pay fees or other amounts owed to the franchisor on time can result in significant interest charges. The 18% annual interest rate is a substantial penalty, but Baya Bar will adhere to state laws if those laws mandate a lower rate, such as the 10% maximum in California. Franchisees should be aware of these potential charges and ensure timely payments to avoid incurring interest expenses.
Additionally, if Baya Bar conducts an audit and finds that a franchisee has understated Gross Sales by 2% or more, the franchisee will be responsible for paying the cost of the audit (estimated to be between $1,000 and $5,000), the understated amount, and interest on the understated amount. This policy underscores the importance of accurate financial reporting and compliance with the franchise agreement to avoid additional fees and penalties.