What is the annual interest rate charged by Better Blend on late payments?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
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Franchisee reports Adjusted Gross Sales. Franchisee acknowledges that BBF has the right to remotely access Franchisee's point-of-sale system to calculate Adjusted Gross Sales.
- (c) Late Fees and Interest. If Franchisee does not make a payment on time, Franchisee shall pay a $100 "late fee" plus interest on the unpaid amount at a rate equal to 18% per year (or, if such payment exceeds the maximum allowed by law, then interest at the highest rate allowed by law).
- (d) Insufficient Funds. BBF may charge $30 for any payment returned for insufficient funds (or, if such amount exceeds the maximum allowed by law, then the fee allowed by law).
- (e) Costs of Collection and Enforcement. Franchisee shall repay any costs incurred by BBF in attempting to collect payments owed by Franchisee or to enforce any other provision of this Agreement (including without limitation, reasonable attorney fees).
- (f) Application. BBF may apply any payment received from Franchisee to any obligation and in any order as BBF may determine, regardless of any designation by Franchisee.
- (g) Obligations Independent; No Set-Off. The obligations of Franchisee to pay to BBF any fees or amounts
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, if a franchisee fails to make payments on time, Better Blend will charge interest on the unpaid amount. The annual interest rate is 18%, but if this rate exceeds the maximum allowed by law, the interest rate will be the highest rate legally permitted. In addition to interest, Better Blend also charges a $100 late fee for overdue payments.
This policy means that prospective Better Blend franchisees need to be aware of the importance of making timely payments to avoid incurring these additional charges. The 18% interest rate is relatively high compared to standard bank lending rates, so late payments could become a significant financial burden. Franchisees should factor in these potential costs when managing their cash flow and budgeting for their Better Blend business.
Furthermore, Better Blend has the right to remotely access the franchisee's point-of-sale system to calculate Adjusted Gross Sales, which are likely used to determine royalty payments. This access ensures that Better Blend can accurately assess sales figures and that franchisees are paying the correct amounts. Franchisees should ensure their point-of-sale systems are secure and that they understand how Better Blend accesses and uses this data.
In addition to late fees and interest, Better Blend may charge $30 for any payment returned due to insufficient funds, although this fee will be adjusted if it exceeds the maximum allowed by law. Franchisees are also responsible for repaying any costs Better Blend incurs while attempting to collect payments or enforce any provision of the Franchise Agreement, including reasonable attorney fees. This comprehensive approach to late payments and enforcement highlights the importance of franchisees maintaining good financial standing and adhering to the terms of the Franchise Agreement.