What happens if a Carbones Pizzeria franchisee fails to pay royalties or advertising fees?
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 items (a) through (d) shall occur immediately upon receipt of written notice. Termination for the events described in item I shall occur if Franchisee fails to correct the breach within thirty (30) days after notice from Franchisor. 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.
Any Royalty payment not remitted on time shall bear interest at the rate of one and a half percent (1.5%) per month, until such time as it is received by Franchisor; provided, however, that if any applicable state law limits the maximum legal interest rate to a lower amount, then in that event the lower interest rate will be applicable.
If Franchisee fails to timely report Gross Sales for any period, withholds Franchisor's access to accounting and financial systems or data, or otherwise fails to pay amounts due to Franchisor, Franchisor may debit Franchisee's account for: (i) one hundred ten percent (110%) of the Royalty fees and Advertising Contributions last paid by Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria FDD, failure to pay royalties or advertising fees can lead to specific financial penalties and potential termination of the franchise agreement. Any royalty payment not remitted on time accrues interest at a rate of 1.5% per month until it is received by Carbones Pizzeria, although this rate may be lower if applicable state law dictates a lower maximum legal interest rate. If a franchisee fails to report gross sales, withholds access to accounting systems, or otherwise fails to pay amounts due, Carbones Pizzeria may debit the franchisee's account for 110% of the royalty and advertising fees last paid.
Furthermore, Carbones Pizzeria has the right to terminate the franchise agreement if the franchisee fails to make payment of any royalty, advertising fees, or other amounts due, including interest. However, termination for non-payment only occurs if the franchisee fails to correct the payment default within ten days of receiving notice from Carbones Pizzeria.
These stipulations highlight the importance of maintaining timely payments to Carbones Pizzeria. Franchisees should be aware of the potential for accruing interest on late payments and the risk of termination for continued non-payment. The ability of Carbones Pizzeria to debit a franchisee's account for 110% of the last paid fees also underscores the need for franchisees to ensure they have sufficient funds available and maintain accurate financial reporting to avoid such penalties.