What is the interest rate applied to overdue amounts from a Bens Soft Pretzels Sublicensee?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
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's 2025 Franchise Disclosure Document, a Sublicensee will incur interest on overdue amounts. Specifically, all amounts not paid to the Sublicensor when due will bear interest from the date the payment was due until it is paid. The interest rate applied is 1.5% per month until the balance is paid in full.
In addition to the monthly interest, Bens Soft Pretzels Sublicensees also face a late charge. If any amount due from the Sublicensee is not received by the Sublicensor within five days after the due date, or within five days of written notice if no due date is specified in the Sublicense, the Sublicensee will pay an additional 6% of the overdue amount as a late charge.
These charges are designed to cover the costs incurred by the Sublicensor due to late payments, including processing and accounting fees. It is important to note that acceptance of any late charge does not waive the Sublicensee's default regarding the overdue amount, nor does it prevent the Sublicensor from exercising other rights and remedies under the Sublicense agreement. Therefore, Sublicensees must prioritize timely payments to avoid these additional costs and potential repercussions.