What is the maximum interest rate that can be charged on late payments from a Belocal franchisee?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
All late payments shall bear interest at the lesser of 1.5% per month or the highest rate permissible under applicable law, calculated daily and compounded monthly.
Franchisee shall also reimburse N2 for all reasonable costs incurred by N2 in collecting any late payments, including, without limitation, attorneys' fees.
In addition to all other remedies available under this Agreement or at law (which N2 does not waive by the exercise of any rights hereunder), N2 shall be entitled to suspend the provision of any Services if the Franchisee fails to pay any amounts when due hereunder and such failure continues for 7 days following written notice thereof.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, late payments are subject to an interest charge. Specifically, Belocal franchisees may be charged interest on late payments, but this interest is capped. The interest rate will be the lesser of 1.5% per month or the highest rate permissible under applicable law. This interest is calculated daily and compounded monthly.
This means that if a Belocal franchisee is late on a payment, they will incur interest charges. The 1.5% monthly rate translates to an annual rate of 18%. However, if the applicable state or federal law specifies a lower maximum interest rate, that lower rate will apply instead. This protects the franchisee from excessively high interest rates that might otherwise be legal in some jurisdictions.
In addition to interest, Belocal franchisees are also responsible for reimbursing Belocal for any reasonable costs incurred in collecting late payments. These costs include, but are not limited to, attorney's fees. Belocal also retains the right to suspend services if a franchisee fails to make payments and the failure continues for 7 days after receiving written notice.
Prospective Belocal franchisees should be aware of these late payment terms and ensure they understand their obligations. They should also be prepared to pay not only the late fees and interest, but also any collection costs incurred by Belocal. Careful financial planning and timely payments are essential to avoid these additional expenses and potential service disruptions.