What is the maximum interest rate Big O Tires can charge on overdue fees or expenses?
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's 2025 Franchise Disclosure Document, if a franchisee fails to make timely payments for any fees, products, or services, Big O Tires can charge interest on the overdue amount. The interest rate will be the lesser of 18% per annum, calculated daily, or the highest rate permitted by applicable law. This interest applies starting ten days after the original due date.
This means that if a franchisee owes Big O Tires money, they have a 10-day grace period. After that, interest charges begin to accrue. The 18% annual rate is a significant penalty, but Big O Tires will not charge more than what is legally allowed in the franchisee's jurisdiction. The daily compounding of interest means the charges can add up quickly, so prompt payment is essential.
It is important to note that this interest rate also applies as the post-judgment interest rate in the event of any legal actions related to the Franchise Agreement. This means that if Big O Tires wins a lawsuit against a franchisee, the same interest rate will be applied to any outstanding amounts owed as part of the judgment.