Is there an exception to the material breach clause for late payments to Canine Dimensions?
Canine_Dimensions Franchise · 2025 FDDAnswer from 2025 FDD Document
following week. - 5.5.2.2 Debit Franchisee's account a non-refundable late reporting fee of forty-
five dollars ($45.00).
- 5.5.3 To encourage prompt and timely payment of the Royalty Fees and to cover the costs and expenses involved in handling and processing any payments not received by their due dates, Franchisee shall pay a fee of $45.00 for any ACH transfer that is returned by the bank, and shall also pay, upon demand, interest on any overdue amount equal to the lesser of: (i) one and one-half percent (1.5%) per month; or (ii) the highest rate permitted by law. Such charge shall accrue from the date payment was due until the date payment is actually received by Franchisor. Each failure by Franchisee to report its Gross Sales to Franchisor, or to pay the Royalty Fees or other payments payable to Franchisor when due, will be a material breach of this Agreement, except if the lateness is the result of Franchisor's failure to debit Franchisee's account in a timely manner.
- 5.5.4 Franchisor's acceptance of any interest payment cannot be construed as a waiver of its rights in respect of
Source: Item 22 — CONTRACTS (FDD page 36)
What This Means (2025 FDD)
According to Canine Dimensions' 2025 Franchise Disclosure Document, a franchisee's failure to report gross sales or make payments when due constitutes a material breach of the agreement. However, there is an exception: if the lateness is due to Canine Dimensions' failure to debit the franchisee's account in a timely manner, it will not be considered a material breach.
To encourage timely payments, Canine Dimensions charges a $45.00 fee for any ACH transfer returned by the bank. Additionally, overdue amounts accrue interest at the lesser of 1.5% per month or the highest rate permitted by law, calculated from the due date until the payment is received.
It is important to note that Canine Dimensions' acceptance of any interest payment does not waive its rights regarding the initial default, including the right to terminate the agreement. Franchisees should ensure they understand the payment terms and potential penalties for late payments to avoid breaching the agreement.