What constitutes a default under the Initial Fee Note for a Baymont Inn Suites franchise?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Initial Fee Note. The Initial Fee Note is not subject to setoff, offset or recoupment. If the Franchise Agreement terminates for any reason or you transfer the Facility, we may demand that you immediately pay the Initial Fee Note in full. If you fail to make any required installment payment on time, we may demand that you immediately pay the Initial Fee Note in full. If you do not pay the Initial Fee Note within 10 days after it is due, the Initial Fee Note will bear simple interest at the rate of the lesser of 18% per annum (1.5% per month) or the highest rate allowed by law. Default under the Initial Fee Note will constitute a default under the Franchise Agreement. If the Initial Fee Note is collected by or through an attorney, we will be entitled to collect reasonable attorney's fees and all costs of collection.
Source: Item 10 — FINANCING (FDD pages 59–61)
What This Means (2025 FDD)
According to Baymont Inn Suites's 2025 Franchise Disclosure Document, a default under the Initial Fee Note occurs if a franchisee fails to make any required installment payment on time. If this happens, Baymont Inn Suites may demand immediate and full payment of the outstanding Initial Fee Note balance.
Furthermore, if the franchisee does not pay the Initial Fee Note within 10 days after it is due, the note will accrue simple interest. This interest is calculated at the lesser of 18% per annum (1.5% per month) or the highest rate permitted by law. It's important to note that a default on the Initial Fee Note also constitutes a default under the overall Franchise Agreement, which could have further repercussions for the franchisee.
Finally, if Baymont Inn Suites has to use an attorney to collect the Initial Fee Note, the franchisee will be responsible for covering reasonable attorney's fees and all costs associated with the collection process. This highlights the importance of adhering to the payment schedule outlined in the Initial Fee Note to avoid these additional financial burdens and potential default on the Franchise Agreement.