Is there a limit to the interest rate charged on late royalty payments for Carbones Pizzeria?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
isee 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.
e. 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.
**6.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria Franchise Disclosure Document, there is a limit to the interest rate charged on late royalty payments. Carbones Pizzeria charges interest on any royalty payment not remitted on time at a rate of 1.5% per month. However, if any applicable state law limits the maximum legal interest rate to a lower amount, then the lower interest rate will be applicable. This same interest rate and condition applies to advertising fees not paid on time.
This means that while Carbones Pizzeria's standard interest rate for late payments is 1.5% per month, a franchisee will only be charged that rate if it is legal in their state. If the state's legal maximum interest rate is lower than 1.5% per month, that lower rate will be applied instead.
For a prospective franchisee, this is important to understand because the cost of late royalty payments could vary depending on the location of the franchise. It would be prudent to check the specific state laws regarding maximum interest rates to understand the potential penalties for late payments. This ensures compliance and helps in financial planning.