Can interest on unpaid amounts be assessed from the date due in an arbitration with Beverly Anns Cookie?
Beverly_Anns_Cookie Franchise · 2025 FDDAnswer from 2025 FDD Document
The arbitrator will have authority to assess actual damages sustained by reason of any breach or wrongful termination of this Franchise Agreement, including monetary damages and interest on unpaid amounts from date due, specific performance, injunctive and declaratory relief, and legal fees and costs, but will not have any authority to amend or modify the terms of this Franchise Agreement or to assess exemplary or punitive damages.
Except for claims excluded from mediation and arbitration herein, the arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Franchise Agreement including, but not limited to any claim that all or any part of this Franchise Agreement is void or voidable.
Source: Item 23 — RECEIPTS (FDD pages 57–235)
What This Means (2025 FDD)
According to Beverly Anns Cookie's 2025 Franchise Disclosure Document, an arbitrator has the authority to assess interest on unpaid amounts from the date they are due. This applies in cases of breach or wrongful termination of the Franchise Agreement. The arbitrator's decision is binding on both parties, meaning both Beverly Anns Cookie and the franchisee must adhere to the ruling.
This provision is significant for prospective franchisees as it clarifies the potential financial consequences of failing to meet payment obligations under the Franchise Agreement. If a franchisee breaches the agreement by not paying amounts owed, they could be liable not only for the original amount but also for interest accrued from the date the payment was due. This could increase the overall financial burden on the franchisee.
It is important to note that while the arbitrator can award damages and interest, their authority is limited. They cannot amend or modify the terms of the Franchise Agreement or assess exemplary or punitive damages. The arbitrator's role is to interpret and enforce the existing agreement, not to create new terms or impose penalties beyond actual damages and interest. This ensures that the arbitration process remains focused on resolving disputes within the bounds of the agreed-upon contract.
This clause provides a degree of financial protection for Beverly Anns Cookie, ensuring they can recover not only the principal amount owed but also compensation for the time value of money. For franchisees, it underscores the importance of adhering to the payment terms outlined in the Franchise Agreement to avoid potential interest charges and other financial repercussions.