What is the maximum interest rate that can be charged on the Boulder Designs Promissory Note?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
together with interest on the unpaid | principal balance outstanding from time to time hereon at a rate equal to 8.5% per annum | or the Maximum | Rate, whichever is less, under the terms and conditions of this promissory note and security agreement | ("Note"). This Note is due and payable in 42 | monthly installments of principal and interest. The first of | "Maximum Rate" means the maximum lawful rate of interest permitted by applicable usury laws | now or hereafter enacted which interest rate shall change when and as said laws change, to the extent | permitted by law, effective on the day such change in said laws becomes effective.
excess of the Maximum Rate. Neither Debtor nor any co-makers, endorsers, sureties, guarantors or other parties now or hereafter becoming liable for payment of this Note shall ever be required to pay interest or finance charges at a rate in excess of the Maximum Rate, and the provisions of this paragraph shall control over all other provisions of this Note and any other Transaction Document which may be in apparent conflict herewith. PAYEE and any other holder of this Note expressly disavow any intention to charge or collect excessive unearned interest or finance charges in the event the maturity of this Note is accelerated.
In determining whether or not the interest paid or payable, under any specific circumstance, exceeds the maximum amount permitted under applicable law, PAYEE and Debtor shall to the greatest extent permitted by applicable law, (i) characterize any non-principal payment as an expense, fee or premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate and spread the total amount of interest throughout the entire contemplated term hereof in accordance with the amounts outstanding from time to time thereunder and the Maximum Rate from time to time in effect under applicable law in order to lawfully charge the maximum amount of interest permitted under applicable law.
The term "applicable law" as used in this Note shall mean the laws of the State of Texas or the laws of the United States, whichever laws allow the greater rate of interest, as such laws now exist or may be changed or amended or come into effect in the future.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs's 2025 Franchise Disclosure Document, the interest rate on the promissory note is 8.5% per annum or the Maximum Rate, whichever is less. The "Maximum Rate" is defined as the maximum lawful rate of interest permitted by applicable usury laws. This rate can change as the laws change.
Boulder Designs cannot charge interest or finance charges exceeding the Maximum Rate. The document specifies that this provision takes precedence over any conflicting terms in the note or related documents. If the maturity of the note is accelerated or prepaid, and the interest exceeds the Maximum Rate, Boulder Designs will either refund the excess to the debtor or credit it against the principal balance.
In determining whether the interest exceeds the maximum amount permitted by law, Boulder Designs and the debtor will, to the greatest extent permitted by applicable law, characterize non-principal payments as expenses, fees, or premiums rather than interest, exclude voluntary prepayments, and amortize the total amount of interest throughout the term of the note. The promissory note is governed by the laws of the State of Texas or the laws of the United States, whichever allows the greater rate of interest.