What is the interest rate Big O Tires charges on overdue payments, and how is it calculated?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
If any fee or any other amount due under this Agreement, including payments for Products and Services, is not received within ten (10) days after such payment is due, Franchisee shall pay Big O interest equal to the lesser of the daily equivalent of eighteen percent (18%) per annum of such overdue amount per year, or the highest rate then permitted by applicable law, for each day such amount is past due.
This interest rate shall apply as the post-judgment interest rate, regardless of the applicable statutory rate, in the event of any legal actions related to this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, if any fee or amount due, including payments for products and services, is not received within ten days after the due date, Big O Tires will charge interest. This interest is calculated as the lesser of either the daily equivalent of 18% per year of the overdue amount or the highest rate permitted by applicable law. This interest accrues for each day the amount remains unpaid.
This late fee policy applies to all fees and amounts due under the Franchise Agreement. This includes, but is not limited to, royalty fees, national marketing fees, and payments for products and services provided by Big O Tires. The interest rate also applies as the post-judgment interest rate in the event of legal actions related to the agreement.
For a prospective Big O Tires franchisee, this means that failing to make timely payments can result in significant interest charges. It is crucial to ensure all payments are made on time to avoid these additional costs. Franchisees should be aware of the specific due dates for all fees and payments and factor in potential delays in payment processing to avoid triggering the late fee and interest charges. The policy is fairly standard within the franchising industry, where franchisors rely on timely payments to maintain their own financial obligations.