What is the interest rate applied to underpaid fees discovered during an audit of a Bhc Restaurant, and are there any exceptions?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Franchisor and its designated agents also have the right upon 10 days prior notice to examine, copy and audit the books and records relating to the Franchised BHC Restaurant and Franchisee's operation of the Franchised Business. 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 will charge interest on the underpaid amount. The interest is calculated daily from the original due date until the payment is made.
The standard annual percentage rate (APR) for this interest is 18%. However, there is an exception: if the laws in the state where the Bhc restaurant is located limit interest rates on delinquent payments to a lower APR, that lower rate will be applied instead of the 18%.
This policy ensures that Bhc franchisees are incentivized to accurately report and pay all required fees on time. Franchisees should be aware of the potential for audits and the financial consequences of underreporting revenues or other amounts owed to Bhc. It is also important for franchisees to understand the interest rate laws in their specific state, as these laws could override Bhc's standard 18% APR.