What is the prepayment premium for the Beverly Anns Cookie loan in year three?
Beverly_Anns_Cookie Franchise · 2025 FDDAnswer from 2025 FDD Document
You will be permitted to prepay your Loan if they simultaneously pay a premium as follows: for each year or partial year remaining: (A) 3% in year one of the Loan, (B) 2% in year two of Loan, and (C) 1% in year three of the Loan; provided, that there will be no premium thereafter.
Source: Item 22 — CONTRACTS (FDD page 57)
What This Means (2025 FDD)
According to Beverly Anns Cookie's 2025 Franchise Disclosure Document, franchisees are permitted to prepay their loan with a premium. The prepayment premium decreases over the loan term. Specifically, in year three of the loan, the prepayment premium is 1% of the outstanding loan amount. After year three, there is no prepayment premium.
This means that if a Beverly Anns Cookie franchisee decides to pay off their loan in the third year, they will need to pay an additional 1% of the remaining balance as a premium. This could be a significant cost, depending on the size of the loan and the remaining balance.
This prepayment premium is in addition to any other amounts due under the loan agreement. The franchisee is unconditionally obligated to pay all payments and any other amounts due under the loan for the full loan term, even if the equipment is damaged or destroyed, or if they have a temporary or permanent loss of its use.