What is the 'Default Rate' for overdue payments to Burros Fries, and how is it determined?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
ii) gratuities paid by guests to Franchisee's employees; and (iii) the amount of refunds Franchisee in good faith gives and refunds of previous payments Franchisee made.
Any payment or report not actually received by us on or before the specified date shall be deemed overdue. If any payment is overdue, in addition to the right to exercise all rights and remedies available to us under this Agreement, Franchisee shall pay us a fee of twenty-five dollars ($25), in addition to the overdue amount, interest on such amount from the date it was due until paid at the rate of 1.5% percent per month or the maximum r
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries' 2024 Franchise Disclosure Document, any payment or report not received by the specified date is considered overdue. If a payment is overdue, Burros Fries will charge a $25 fee in addition to the overdue amount. Interest accrues on the overdue amount from the date it was due until it is paid in full.
The interest rate applied to overdue amounts is defined as the "Default Rate." This rate is the lower of either 1.5% per month or the maximum rate allowed by the laws of the state where the Burros Fries business is located. This means that the actual interest rate could vary depending on state law, but it will never exceed 1.5% per month.
For a prospective Burros Fries franchisee, this means that it is crucial to make all payments and submit all reports on time to avoid incurring late fees and interest charges. Franchisees should be aware of the specific laws in their state regarding maximum interest rates to understand the potential cost of late payments. Consistently late payments could lead to significant financial penalties and may also constitute a breach of the franchise agreement.