Is there a prepayment premium after year three of the Beverly Anns Cookie loan?
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 the 2025 Beverly Anns Cookie Franchise Disclosure Document, franchisees are permitted to prepay their loan, but may have to pay a premium. The prepayment premium is 3% in year one of the loan, 2% in year two, and 1% in year three. After the third year of the loan, there is no prepayment premium.
This means that a Beverly Anns Cookie franchisee who takes out a loan to finance their franchise can pay it off early, but doing so in the first three years will incur an additional charge. This charge decreases each year, incentivizing waiting until at least year three to prepay the loan if possible.
This type of prepayment penalty is fairly common in franchise lending, as it protects the lender's expected return on the loan. Franchisees should carefully consider their ability to repay the loan early and factor in these premiums when making financial projections.