What late charge may be applied to a late payment on the Bumble Roofing promissory note?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
Any payment is late if not received by holder within 10 days after it is due.
If a payment is late, holder may, in its sole discretion elect to;
- A.
Declare the entire unpaid principal and interest balances immediately due and payable; or
- B.
Accept the late payment along with a late charge in the amount of 10% of the amount of the late payment.
The late charge will be for the purpose of compensating holder for additional expenses which it is recognized that holder will incur as a result of the late payment.
All payments, as of the date they are received, will first be credited to any late charges due; the balance, if any, will then be credited to the outstanding interest balance; and the balance, if any, will then be credited to the outstanding principal balance.
In the event holder elects under 4A above to demand payment in full of the entire unpaid balance, holder will first provide maker with written notice of its election, demanding payment in full within 10 days.
In the event a default exists after the 10-day notice period has expired, maker promises and agrees:
- A.
That the entire outstanding principal and interest balances, including late charges, will bear interest from the original due date of the delinquent payment at the rate of 18% (default rate) per year (or if this rate exceeds the maximum permitted by law, then the interest rate will be the highest rate permitted by law); and
- B.
To pay holders actual attorneys' fees and costs incurred in collection efforts as a result of the default.
Source: Item 23 — RECEIPT (FDD pages 53–188)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, if a franchisee's payment is received more than 10 days after its due date, it is considered late. In such instances, Bumble Roofing has the discretion to take certain actions.
First, Bumble Roofing can declare the entire unpaid principal and interest balances immediately due and payable. Alternatively, Bumble Roofing may choose to accept the late payment, but also impose a late charge. This late charge is calculated as 10% of the amount of the late payment.
This late charge is intended to compensate Bumble Roofing for the additional expenses they anticipate incurring due to the late payment. All payments received are first applied to any outstanding late charges, then to the outstanding interest balance, and finally to the outstanding principal balance. This highlights the importance of franchisees making timely payments to avoid these additional costs and potential acceleration of the debt.
In the event that Bumble Roofing demands full payment of the outstanding balance and the franchisee defaults after a 10-day notice period, the outstanding principal and interest, including late charges, will accrue interest at a default rate of 18% per year. The franchisee will also be responsible for covering Bumble Roofing's attorney's fees and costs associated with collection efforts resulting from the default.