What is the consequence of late payment by the Bens Soft Pretzels subtenant to the sublessor?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
- 2.4 Interest and Penalties for Late Payment. In the event any amount due hereunder is not paid when and as same becomes due, Subtenant shall pay all late charges, interest and penalties due under the Lease.
In addition, Subtenant acknowledges that late payment by Subtenant to Sublessor of any amount due hereunder will cause Sublessor to incur costs not contemplated by this Sublease, the exact amount of such costs being extremely difficult and impractical to fix.
Such costs include, without limitation, processing and accounting charges, in addition to other charges that may be imposed on Sublessor.
Therefore, if any amount due hereunder from Subtenant is not received by Sublessor within five (5) days after its due date or, if no due date is specified in this Sublease, within five (5) days after receipt of written notice from Sublessor, Subtenant shall pay to Sublessor an additional sum of six percent (6%) of the overdue amount as a late charge.
The parties agree that this late charge represents a fair and reasonable estimate of the costs that Sublessor will incur by reason of late payment by Subtenant.
Acceptance of any late charge shall not constitute a waiver of Subtenant's default with respect to the overdue amount nor prevent Sublessor from exercising any of the other rights and remedies of the Sublessor under this Sublease.
In addition, all amounts not paid to Sublessor when and as same become due hereunder shall bear interest from the date due until paid at the rate of one and one-half percent (1.5%) per month until paid.
Source: Item 22 — CONTRACTS (FDD pages 46–47)
What This Means (2025 FDD)
According to the 2025 Bens Soft Pretzels Franchise Disclosure Document, if a subtenant fails to make timely payments to the sublessor, they will incur specific financial penalties. If any amount due is not paid when it becomes due, the subtenant is responsible for all late charges, interest, and penalties as outlined in the lease.
Ben's Soft Pretzels acknowledges that late payments from the subtenant can lead to unforeseen costs for the sublessor, which are difficult to precisely calculate. These costs may include processing and accounting charges, as well as other potential charges imposed on the sublessor. Therefore, if the sublessor does not receive the payment within five days of the due date, or within five days of receiving written notice from the sublessor if no due date is specified, the subtenant must pay a late charge of six percent (6%) of the overdue amount.
The FDD specifies that this late charge is considered a reasonable estimate of the costs the sublessor will incur due to the late payment. However, acceptance of this late charge does not waive the subtenant's default regarding the overdue amount, nor does it prevent the sublessor from pursuing other rights and remedies available under the sublease. Additionally, all unpaid amounts will accrue interest from the due date until paid, at a rate of one and one-half percent (1.5%) per month.