What is the interest rate charged on overdue payments to Burros Fries?
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 the 2024 Burros Fries Franchise Disclosure Document, any payment not received by the specified date is considered overdue. If a payment is overdue, Burros Fries charges a fee of $25 in addition to the overdue amount.
The interest rate applied to the overdue amount is 1.5% per month, which equates to 18% annually. However, the agreement specifies that the interest rate will be the lower of 1.5% per month or the maximum rate allowed by the laws of the franchisee's state.
For franchisees in California, the interest rate charged on overdue payments must comply with the California Constitution. The interest rate cannot exceed 10% annually or 5% annually plus the prevailing interest rate charged to banks by the Federal Reserve Bank of San Francisco, whichever is higher. This ensures that the interest rate charged is within the legal limits of the franchisee's location.