What is the interest rate applied to underpaid fees discovered during an audit of a Bhc franchise, and how is it calculated?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
If an examination or audit discloses any underpayment of any fee, Franchisee must promptly pay the deficient amount plus interest calculated daily from the due date until paid at an APR of 18% (unless interest rates on delinquent payments in the state in which Franchisee's Franchised BHC Restaurant is located are limited by law to a lower APR, in which case that lower APR will apply).
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, if an audit reveals that a franchisee has underpaid any fees, the franchisee is required to pay the deficient amount. Bhc charges interest on the underpaid amount, calculated daily from the original due date until the payment is made. The interest rate is an APR of 18%.
However, the 2025 FDD specifies a condition: if the interest rates on delinquent payments in the state where the Bhc restaurant is located are legally limited to a lower APR, then that lower APR will be applied instead of the 18%. This protects the franchisee from being charged an interest rate that exceeds state law.
This policy ensures that Bhc franchisees are incentivized to maintain accurate records and make timely payments. The daily calculation of interest means that the longer the underpayment goes unaddressed, the more the franchisee will owe. Franchisees should be aware of both the 18% APR and any applicable state laws regarding interest rate limits to avoid potential penalties.