What interest rate does Bhc charge on late payments, and how is it calculated?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
ilure by Franchisee to implement such EFT system in strict 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 costs and expenses (including administrative costs, collection costs, loss of interest, and other direct and indirect costs in an uncertain amount); and (ii) it would be impractical or extremely difficult to fix in advance the exact amount of costs and expenses Franchisor would incur.
- (f) If any payment is not successful due to insufficient funds, stop payment, or any similar event, Franchisee agree to pay a dishonored item fee of the lesser of $100 per occurrence, or the highest amount allowed by law.
4.8 No Accord or Satisfaction.
If Franchisee pays, or Franchisor otherwise receives, a lesser amount than the full amount provided for under this Agreement for any payment due
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, if a franchisee fails to make payments on time, including royalty and marketing and promotion fees, it constitutes a material breach of the agreement. In such cases, Bhc will impose a late charge of $100 for each occurrence, in addition to interest. The interest charged will be the lesser of the daily equivalent of 10% per year or the highest amount allowed by law. Bhc states that this interest charge is considered reasonable due to the administrative, collection, and other direct and indirect costs the company incurs as a result of late payments.
Additionally, if an audit reveals any underpayment of fees, the franchisee must pay the deficient amount along with interest. This interest is calculated daily from the due date until the payment is made, at an annual percentage rate (APR) of 18%. However, if the state in which the Bhc restaurant is located has laws limiting interest rates on delinquent payments to a lower APR, that lower rate will be applied instead.
Prospective franchisees should be aware of these late payment and underpayment terms, as they can result in additional costs and penalties. It is important to ensure timely and accurate payments to avoid these charges and maintain compliance with the franchise agreement. Franchisees should also be aware of the potential for audits and the associated costs if underpayments are discovered or if the franchisee fails to provide necessary information in a timely manner.