What does 'Maximum Rate' refer to in the context of the Caring Senior Service note?
Caring_Senior_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
repay the outstanding principal balance of this Note, in whole or in part, at any time and from time to time, without premium or penalty.
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- Usury Laws. Regardless of any provisions contained in this Note, the Payee shall never be deemed to have contracted for or be entitled to receive, collect, or apply as interest on the Note, any amount in excess of the Maximum Rate, and, in the event Payee ever receives, collects, or applies as interest any such excess, such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance of this Note, and, if the principal balance of this Note is paid in full, then any remaining excess shall be paid to Maker.
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- Costs.
Source: Item 23 — RECEIPTS (FDD pages 53–204)
What This Means (2025 FDD)
According to Caring Senior Service's 2025 Franchise Disclosure Document, the 'Maximum Rate' refers to the highest amount of interest that the payee can legally collect on a note. This is in relation to usury laws, which are in place to prevent lenders from charging excessively high interest rates.
Specifically, if the payee receives any amount as interest that exceeds this maximum rate, the excess amount will be applied to reduce the unpaid principal balance of the note. If the principal balance is fully paid, any remaining excess interest must be returned to the maker of the note.
Additionally, the FDD states that all past due amounts on the note will bear interest at the Maximum Rate. However, if no Maximum Rate is established by applicable law, the interest rate will be 10% per year. This clause protects the maker of the note from illegally high interest charges and ensures compliance with usury laws.