What is the interest rate on the note receivable from the Carbones Pizzeria franchisee?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
Accounts receivable for royalty fees from franchisees are due on or before the first day of each week for the sales during the preceding week and accounts receivable for advertising fee royalties from franchisees are due on or before Tuesday of each week for the sales during the preceding week. All receivables not received on time receive additional scrutiny from management and may be charged interest at rates up to 12% annually.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria Franchise Disclosure Document, accounts receivable for royalty fees or advertising fees not received on time may be charged interest. The interest rate can be up to 12% annually. This applies to royalty fees from franchisees due on or before the first day of each week for the sales during the preceding week, and to advertising fee royalties from franchisees due on or before Tuesday of each week for the sales during the preceding week.
For a prospective Carbones Pizzeria franchisee, this means that failing to remit royalty and advertising fees on time can result in an additional charge of up to 12% annually on the outstanding balance. This policy incentivizes timely payments and ensures that Carbones Pizzeria receives the funds necessary for ongoing operations and advertising efforts.
It's important for franchisees to maintain diligent financial management practices to avoid incurring these interest charges. Franchisees should ensure they understand the specific due dates and payment methods outlined in the franchise agreement to prevent late payments and associated penalties. This late fee is relatively standard in the franchise industry.