If Buona cures defaults, what interest rate applies to the sums expended?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Cure Defaults.
Franchisor may, but without any obligation to do so, cure any defaults, including without limitation, paying any unpaid bills and liens, including without limitation those for construction, labor, and materials.
Guarantor, upon Franchisor's demand, shall promptly pay to Franchisor all such sums expended together with interest thereon at the lesser of the rate of 1.5% per month or the highest rate of interest allowable under applicable law.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if Buona chooses to cure any defaults on behalf of the guarantor, including paying unpaid bills and liens for construction, labor, and materials, the guarantor is responsible for promptly paying Buona all sums expended. This includes interest on those sums.
The interest rate applied to these sums will be the lesser of 1.5% per month or the highest rate of interest allowable under applicable law. This means that the actual interest rate could vary depending on state or federal laws that may set limits on interest rates.
As a prospective Buona franchisee, it's important to understand the conditions under which Buona might cure defaults and the financial implications, including the interest rate applied to the expended sums. This clause protects Buona by ensuring they are compensated for any costs incurred while resolving a franchisee's defaults, but it also places a financial burden on the franchisee or guarantor to repay those costs with interest.