What happens if a Bens Soft Pretzels Sublicensee fails to pay an amount when due?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
The Sublicensor will then deposit the amounts due into its account by the preauthorized check or electronic funds transfer system.
- 2.4 Interest and Penalties for Late Payment. In the event any amount due hereunder is not paid when and as same becomes due, Sublicensee shall pay all late charges, interest and penalties due under the License.
In addition, Sublicensee acknowledges that late payment by Sublicensee to Sublicensor of any amount due hereunder will cause Sublicensor to incur costs not contemplated by this Sublicense, 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 Sublicensor.
Therefore, if any amount due hereunder from Sublicensee is not received by Sublicensor within five (5) days after its due date or, if no due date is specified in this Sublicense, within five (5) days after receipt of written notice from Sublicensor, Sublicensee shall pay to Sublicensor 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 Sublicensor will incur by reason of late payment by Sublicensee.
Acceptance of any late charge shall not constitute a waiver of Sublicensee's default with respect to the overdue amount nor prevent Sublicensor from exercising any of the other rights and remedies of the Sublicensor under this Sublicense.
In addition, all amounts not paid to Sublicensor 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 Bens Soft Pretzels' 2025 Franchise Disclosure Document, if a Sublicensee fails to pay an amount when due, they will incur penalties. Specifically, if any amount due from the Sublicensee is not received by the Sublicensor within five days of the due date, or within five days of receiving written notice from the Sublicensor if no due date is specified, the Sublicensee must pay an additional sum of six percent of the overdue amount as a late charge. This late charge is considered a fair estimate of the costs the Sublicensor will incur due to the late payment.
In addition to the late charge, all unpaid amounts will accrue interest from the due date until paid. The interest rate is set at one and one-half percent (1.5%) per month. It's important to note that accepting the late charge does not waive the Sublicensee's default regarding the overdue amount. The Sublicensor retains the right to exercise any other remedies available to them under the Sublicense agreement.
This clause ensures that Bens Soft Pretzels Sublicensors are compensated for the additional costs and inconveniences caused by late payments, and it incentivizes Sublicensees to make timely payments. Prospective Sublicensees should be aware of these penalties and ensure they have sufficient financial planning to avoid late payment situations, as these charges can add up quickly and do not prevent the Sublicensor from pursuing other remedies for the default.