What is the prepayment premium for the Beverly Anns Cookie loan in year two?
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 is 2% in year two of the loan. There is also a prepayment premium of 3% in year one of the loan and 1% in year three of the loan. After year three, there is no prepayment premium.
This means that if a Beverly Anns Cookie franchisee decides to pay off their loan early during the second year, they will incur an additional charge of 2% of the outstanding loan amount. This premium compensates the lender for the loss of future interest payments they would have received had the loan continued for its full term.
This condition affects a franchisee's financial planning. If a franchisee anticipates having extra funds and considers prepaying the loan, they must factor in this premium to determine the actual cost of prepayment. It may be more advantageous to wait until after year three to avoid the premium altogether. Franchisees should carefully evaluate their financial situation and the terms of the loan agreement before deciding to prepay.