What happens if a Carbones Pizzeria franchisee is in default of any payments owed to the franchisor?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor may terminate this Agreement on the happening of any one of the following events:
- f. Failure of Franchisee to make payment to Franchisor of any Royalty, Advertising Fees or other amounts (including interest) due to Franchisor pursuant to the terms of this Agreement.
Termination for the events described in item (f) shall occur if Franchisee fails to cure such payment default within ten (10) days of notice from Franchisor.
Advertising Fees not paid by Franchisee as required herein shall bear interest at the rate of one and a half percent (1.5%) per month, provided, however, that in no event shall the rate of interest payable by Franchisee on any unpaid balance under this Agreement exceed the maximum legal rate under applicable law.
Upon termination of this Agreement for any reason whatsoever, all rights and privileges granted by Franchisor hereunder shall immediately terminate, and in such event, Franchisee shall immediately pay to Franchisor all moneys owed to Franchisor, regardless of when due, without offset or reduction of any kind whatsoever. Furthermore, Franchisee shall immediately cease to use, by advertising or otherwise, the names "Carbone's Pizzeria" or "Carbone's Pizza" and any and all other of the Names and Marks. Franchisee shall immediately return to Franchisor all forms, advertising matter, bulletins, procedures, recipes, the Manual and any other manuals provided to Franchisee, and not retain any copies thereof.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria Franchise Disclosure Document, if a franchisee fails to make payments of any royalties, advertising fees, or other amounts due to Carbones Pizzeria, the franchisor can terminate the franchise agreement. To avoid termination, the franchisee has a 10-day period after receiving notice from Carbones Pizzeria to correct the payment default.
Additionally, unpaid advertising fees accrue interest at a rate of 1.5% per month. However, the agreement specifies that the interest rate on any unpaid balance will not exceed the maximum legal rate under applicable law. This ensures compliance with usury laws, which set limits on interest rates to protect borrowers from excessive charges.
Upon termination of the franchise agreement for any reason, the franchisee is obligated to immediately pay all outstanding monies owed to Carbones Pizzeria, regardless of when they were originally due. This payment must be made without any offset or reduction. The franchisee must also cease using the Carbone's Pizzeria name and other trademarks and return all operational manuals and materials to the franchisor.