What is the maximum annual interest rate that Carbones Pizzeria may charge on late receivables?
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 Carbones Pizzeria's 2025 Franchise Disclosure 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, while advertising fee royalties are due on or before Tuesday of each week for the prior week's sales. If these receivables are not received on time, Carbones Pizzeria may charge interest.
The maximum annual interest rate that Carbones Pizzeria can charge on these late receivables is 12%. This applies to both royalty fees and advertising fee royalties from franchisees.
This policy provides Carbones Pizzeria with a mechanism to encourage timely payments from franchisees. Franchisees should be aware of these due dates and ensure payments are made promptly to avoid incurring interest charges. It is a fairly standard practice in franchising to charge interest on overdue amounts, as it protects the franchisor's cash flow and encourages financial discipline among franchisees.