Is interest payable on payments disputed in good faith under the Bevaris Alliance agreement?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
- 25.2 Interest. If any party fails to make any payment due to the other under this agreement by the due date for payment, then, without limiting the other party's remedies under clause 20 and clause 21, the defaulting party shall pay interest on the overdue amount at the rate of 10% per annum or the maximum percentage of interest allowed by law, whichever is greater. Such interest shall accrue on a daily basis from the due date until actual payment of the overdue amount, whether before or after judgment. The defaulting party shall pay the interest together with the overdue amount. In relation to payments disputed in good faith, interest under this clause is payable only after the dispute is resolved, on sums found or agreed to be due, from the due date until payment.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 Bevaris Alliance Franchise Disclosure Document, interest on disputed payments depends on whether the dispute is made in good faith. Specifically, if a franchisee disputes a payment in good faith, interest is only payable after the dispute is resolved.
Interest will accrue on sums found or agreed to be due, calculated from the original due date until the payment is made. This clause protects franchisees from accruing interest on amounts they genuinely dispute, but it also stipulates that once the dispute is settled, interest applies retroactively from the initial due date.
If a party fails to make a payment by the due date, Bevaris Alliance can charge interest on the overdue amount at a rate of 10% per annum, or the maximum percentage allowed by law, whichever is greater. This interest accrues daily from the due date until the payment is made. This applies whether the payment is made before or after a legal judgment. The defaulting party is responsible for paying both the overdue amount and the accrued interest.
This policy encourages franchisees to resolve disputes promptly and ensures that Bevaris Alliance is compensated for overdue payments once a dispute is settled. Franchisees should be aware of this clause and ensure they document the basis for any good faith disputes to avoid potential interest charges.