What is the maximum annual interest rate charged on late Carbones Pizzeria receivables?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
Accounts receivable for continuing franchise fee royalties 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. Accounts receivable are occasionally written-off on a case by case basis.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the company may charge interest on late accounts receivable from franchisees. Specifically, receivables for continuing franchise fee royalties are due on or before the first day of each week for the prior week's sales, 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's management will scrutinize them and may charge interest. The maximum annual interest rate that can be applied to these late receivables is 12%. This policy applies to both continuing franchise fee royalties and advertising fee royalties.
For a prospective Carbones Pizzeria franchisee, this means that timely payment of royalties is crucial to avoid incurring interest charges. The 12% annual interest rate could represent a significant additional cost if payments are consistently late. Franchisees should ensure they have systems in place to track and remit royalties promptly to avoid these charges.
It's important for franchisees to understand the specific due dates and payment procedures outlined in their franchise agreement to avoid any misunderstandings or late payment penalties. Maintaining open communication with Carbones Pizzeria regarding any potential payment issues can also help mitigate the risk of incurring interest charges.