What is the maximum interest rate that Carls Jr. charges on overdue payments from franchisees?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
If any payments by Franchisee due to CJR are not received by CJR by the date due, Franchisee, in addition to paying the amount owed, shall pay CJR interest on the amount owed from the date due until paid at the maximum rate permitted for indebtedness of this nature in the state in which the Franchised Restaurant is located, not to exceed 1.5% per fiscal period (as defined by CJR from time to time) or a portion of a fiscal period. Payment of interest by Franchisee on past due obligations is in addition to all other remedies and rights available to CJR pursuant to this Agreement or under applicable law.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, if a franchisee fails to make payments on time, Carls Jr. can charge interest on the overdue amount. This interest accrues from the date the payment was originally due until it is fully paid. The interest rate is determined by the maximum rate legally permitted for this type of debt in the state where the franchised restaurant is located.
However, the FDD also specifies an upper limit on the interest rate that Carls Jr. can charge. Regardless of the state's maximum allowable rate, Carls Jr. will not charge more than 1.5% per fiscal period, as defined by Carls Jr., or a portion of that fiscal period. This means that even if a state law allows for a higher interest rate, Carls Jr. caps its interest charges at 1.5% per fiscal period.
It's important to note that this interest charge is in addition to any other legal remedies or rights that Carls Jr. has available under the franchise agreement or applicable law. This could include pursuing legal action to recover the debt or potentially terminating the franchise agreement in cases of persistent or significant payment defaults. Franchisees need to be aware of these financial obligations and ensure timely payments to avoid incurring interest charges and potential further consequences.