What is the maximum interest rate that Carbones Pizzeria may charge on late receivables?

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. Accounts receivable for advertising fee royalties from franchisees are due on or before Tuesday of each week for the sales during the preceding week. If these receivables are not received on time, Carbones Pizzeria may charge interest.

The FDD states that all receivables not received on time receive additional scrutiny from management and may be charged interest. The maximum annual interest rate that Carbones Pizzeria can charge on these late receivables is 12%.

This means that if a franchisee is late on their royalty or advertising fee payments, Carbones Pizzeria has the right to charge them interest on the overdue amount, up to a maximum of 12% per year. This is a fairly standard practice in franchising, as it incentivizes timely payments and compensates the franchisor for the time value of money and administrative costs associated with collecting late payments. Franchisees should ensure they understand the payment terms outlined in the franchise agreement to avoid incurring these interest charges.