For Brueggers Bagels, what is the interest rate charged on any deficiency in Royalty Fees disclosed by an audit?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensee shall pay to Licensor the amount of any deficiency in Royalty Fee, which is disclosed by such audit plus interest at the rate of eighteen percent (18%) per annum or the maximum interest rate permitted by applicable law, whichever is lower.
If any audit is conducted pursuant to Section 7.4 above and the audit or examination discloses
any liability for Royalty Fee in excess of three percent (3%) of the Royalty Fee paid by Licensee for any monthly reporting period, Licensee shall also promptly pay Licensor the reasonable cost of the audit and any professional fees and the costs of travel, lodging and meals.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, if an audit reveals a deficiency in Royalty Fees, the franchisee must pay Brueggers Bagels the amount of the deficiency. Additionally, Brueggers Bagels will charge interest on the deficiency.
The interest rate applied to the deficiency is eighteen percent (18%) per annum. However, if applicable law sets a maximum interest rate lower than 18%, the lower rate will be used instead. This ensures that Brueggers Bagels complies with all relevant legal restrictions on interest rates.
This policy encourages franchisees to accurately report their Gross Sales and pay the correct Royalty Fees. Franchisees should maintain meticulous records and diligently calculate their Royalty Fees to avoid potential deficiencies and the associated interest charges. Furthermore, if the audit uncovers an underpayment of Royalty Fees exceeding three percent (3%) for any monthly reporting period, the franchisee is also responsible for covering the costs of the audit itself, including professional fees, travel, lodging, and meals for the auditors.