How is the Late Payment Interest calculated for overdue amounts owed to Black Bear Diner?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee(1) | Amount | Due Date |
|---|---|---|
| Audit Expenses | Cost of audit plus interest | As invoiced |
| Late Payment Interest | 18% of the overdue amount, calculated daily, or the maximum rate permitted by law, whichever is less | After due date |
Source: Item 6 — OTHER FEES (FDD pages 14–18)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, if a franchisee fails to make payments on time, Black Bear Diner charges interest on the overdue amount. This late payment interest is calculated at a rate of 18% per year, applied daily to the outstanding balance.
However, the FDD also specifies a condition: the 18% interest rate applies "or the maximum rate permitted by law, whichever is less". This means that if state or federal laws impose a lower maximum interest rate, that lower rate will supersede the 18% stated in the franchise agreement. Franchisees need to be aware of the specific regulations in their jurisdiction to understand the actual interest rate that would apply to late payments.
This type of late payment interest is a fairly standard practice in franchising and other business agreements. It incentivizes timely payments and compensates the franchisor for the administrative costs and potential cash flow disruptions caused by overdue amounts. Prospective Black Bear Diner franchisees should factor this potential cost into their financial planning and ensure they have systems in place to manage payments effectively.