Under the Beehive Homes Guaranty, what is the meaning of 'default interest'?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
----------------------| | | AGREEMENT (the "Guaranty") is given this day of, 2025, by the undersigned: | | | 1. | In consideration of, and as an inducement to, the execution of the franchise agreement | | | | dated, 2025 (referred to in this Guaranty, together with all applicable | | | | amendments, renewals, addenda, supplemental agreements and assignments, as the "Franchise | | | | Agreement") by and among BEE HIVE HOMES, INC. (the "Franchisor") and the parties | | | | identified therein as the Franchisee (the "Franchisee"), and for other good and valuable | | | | consideration, each of the undersigned, jointly and severally, for themselves, their heirs, legal | | | | representatives, successors and assigns (hereinafter referred to individually | and collectively as | | | "Guarantor" whether one or more) personally, unconditionally | and irrevocably guarantees to | | | Franchisor, and its successors and assigns, (a) the full and prompt payment of all sums owed by | | | | Franchisee to Franchisor and its Affiliates under the Franchise Agreement and otherwise relating | | | | to the Home, including, but not limited to, all fees and charges, interest, default interest, all other | | | | costs and fees and attorneys' fees incurred in connection with enforcement of the Franchise | | | | Agreement; and (b) the performance of all other obligations of Franchisee arising under the | | | | Franchise Agreement (collectively, the "Obligations"). This Guaranty | is primary to Guarantor | | | and Guarantor will immediately, upon request of Franchisor, make payment in full of all amounts | | | | due and owing to Franchisor and its Affiliates under the Franchise Agreement, and perform each | | | | and every Obligation to Franchisor and its Affiliates under the Franchise Agreement. | | | | | |
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- Waivers of Certain Rights and Defenses. Each Guarantor waives: (a) any right or claim that Guarantor may have to require that an action be brought against Franchisee or any other person as a condition of Guarantor's liability under this Guaranty;
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
Based on the 2025 Beehive Homes Franchise Disclosure Document, the term 'default interest' refers to the interest charged on any sums owed by the franchisee to Beehive Homes or its affiliates under the Franchise Agreement when those sums are not paid on time.
In practical terms, if a Beehive Homes franchisee fails to make timely payments of fees, charges, or any other amounts due to Beehive Homes, they will be subject to default interest. This is in addition to the original amount owed. The Guaranty ensures that the guarantor is responsible for the full and prompt payment of these amounts, including the default interest.
This provision is a standard practice in franchising agreements to incentivize timely payments and to compensate the franchisor for the increased risk and administrative burden associated with late payments. Prospective Beehive Homes franchisees should be aware of the potential for default interest and ensure they understand the payment terms outlined in the Franchise Agreement to avoid incurring these additional charges.