Besides the late fee, what interest rate does Bhc charge on past due amounts?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
accordance with Franchisor's instructions will constitute a material breach of this Agreement.
4.6 Fees Fully Earned: No Setoff on Payments.
All payments made by Franchisee to Franchisor pursuant to this Article 4 are fully earned and non-refundable (except as provided in section 4.2 above) when paid. All payments to be made by Franchisee to Franchisor will made be without setoff, deduction, defense, counterclaim or claims in recoupment.
4.7 Late Fee; Interest on Delinquent Payments.
- (e) Any payment of fees, including but not limited to, Royalty and Marketing and Promotion Fees, not received by Franchisor when due will be a material breach of this Agreement and will be subject to a late charge of $100 per occurrence, plus the lesser of the daily equivalent of 10% per year ("Interest") of the amount past due. Franchisor and Franchisee agree that the Interest of the amount past due is reasonable because (i) as a result of any such late payment, Franchisor will incur certain
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, when a franchisee's payment is not received when due, Bhc can charge interest on the past due amount. Specifically, Bhc can charge the lesser of the daily equivalent of 10% per year of the amount past due. Bhc states that this interest charge is reasonable due to the costs and expenses it will incur as a result of the late payment, including administrative and collection costs.
In addition to the interest charge, Bhc also assesses a $100 late fee for each occurrence of late payment. Furthermore, if a payment is unsuccessful due to insufficient funds or a stop payment, Bhc will charge a dishonored item fee of either $100 or the highest amount allowed by law, whichever is less.
Prospective franchisees should be aware of these potential charges and ensure timely payments to avoid incurring these additional costs. It is common practice in franchising for franchisors to charge interest and fees on late payments to cover their administrative costs and to incentivize franchisees to make timely payments.