For Brain Balance franchisees, what is the interest rate applied to unpaid royalties, advertising fund contributions, or other payments if not paid when due?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
6.03. Late Payment
- (a) If FRANCHISEE shall fail to pay to COMPANY when due any Royalty, Advertising Fund contribution, or any other payment required to be made pursuant to this Agreement, interest shall accrue on the unpaid amount commencing fifteen (15) days after the due date, at a rate of two percent (2%) per month compounded or the highest rate permitted under applicable law, whichever is less.
- (b) If FRANCHISEE shall fail to pay to COMPANY when due any Royalty, Advertising Fund contribution, or any other payment due hereunder, or fails to file any report required to be filed with COMPANY, and such failure continues for a period of thirty (30) days after COMPANY has provided FRANCHISEE with a written demand for performance, in addition to all of its other rights and remedies hereunder, COMPANY may suspend all services required to be performed by COMPANY on behalf of FRANCHISEE hereunder, until such time as FRANCHISEE has made payment of all amounts due to COMPANY and has filed all reports with COMPANY required to be filed by FRANCHISEE.
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, if a franchisee fails to make payments on time for royalties, advertising fund contributions, or any other required payment, interest will accrue starting 15 days after the due date. The interest rate applied is 2% per month, compounded, or the highest rate permitted by applicable law, whichever is less.
This late payment policy means that Brain Balance franchisees need to ensure timely payments to avoid incurring interest charges. The 2% monthly interest rate (24% annually) can significantly increase the amount owed over time. Franchisees should be aware of this policy and factor it into their financial planning to maintain good standing with Brain Balance.
Brain Balance can also suspend all services required to be performed by them on behalf of the franchisee if the franchisee fails to pay when due any Royalty, Advertising Fund contribution, or any other payment due, or fails to file any report required to be filed with Brain Balance, and such failure continues for a period of 30 days after Brain Balance has provided the franchisee with a written demand for performance, in addition to all of its other rights and remedies.