What is the interest rate charged on late payments to the Big Apple Bagels franchisor?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- d. Interest on Late Payments. All royalty fees, Marketing Fund contributions and other amounts which Franchisee owes to Franchisor or its Affiliate shall bear interest after their due date at the lower of 2% per month, or the highest contract rate allowed by local law.
Franchisor may compound the interest on a monthly basis.
Franchisee acknowledges that this Paragraph shall not constitute Franchisor's agreement to accept such payments after same are due or a commitment by Franchisor to extend credit to, or otherwise finance, Franchisee's operation of the BAGELS Store.
Further, Franchisee acknowledges that his failure to pay all such amounts when due shall constitute grounds for termination of this Agreement, as provided in Section 16 hereof, notwithstanding the provisions of this Paragraph.
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, any royalty fees, marketing fund contributions, and other amounts owed to Big Apple Bagels by a franchisee will incur interest after the due date. The interest rate is the lower of 2% per month or the highest contract rate allowed by local law. This interest may be compounded monthly by Big Apple Bagels.
This means that if a Big Apple Bagels franchisee is late on payments, they will be charged interest on the outstanding balance. The specific interest rate will depend on both the 2% monthly rate and the legal limits in the franchisee's local jurisdiction; the lower of the two rates will apply. The ability of Big Apple Bagels to compound this interest monthly could lead to a faster accumulation of debt for the franchisee.
It is important to note that this interest charge does not obligate Big Apple Bagels to accept late payments or extend credit to the franchisee. Furthermore, failure to pay amounts when due can be grounds for termination of the franchise agreement, regardless of the interest charged. Franchisees should ensure timely payments to avoid these penalties and potential termination of their franchise agreement.