What is the interest rate charged by Chatime on overdue amounts?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| Uniforms for First | $500 to $1,500 | $500 to $1,500 | $500 to $1,500 |
|---|---|---|---|
| Location | |||
| Initial Training for First | $5,000 | $5,000 | $5,000 |
| Fee(1) Type of | Amount | Due Date | Remarks |
| Audit Fee | Cost of audit | As invoiced | Payable if (i) we find that you have understated any amount you owe to us by more than 2%, or (ii) you fail to furnish reports, supporting records, other information or financial statements as required on a timely basis and we believe an audit is necessary. The Audit Fee includes accountants' fees, legal fees, and associated travel and accommodation expenses for our employees. |
| Interest Rate | The lesser of 1.5% per month or the highest rate allowed by law | As invoiced | If you fail to pay us any amount when due, you will pay interest on that amount at the Interest Rate from the time the amount should have been paid until it is paid. Interest accrues daily and may be capitalized by us. |
Source: Item 6 — Other Fees (FDD pages 13–17)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if a franchisee fails to pay any amount when due to Chatime, interest will be charged on the overdue amount. The interest rate is the lesser of 1.5% per month or the highest rate allowed by law. This interest accrues daily and may be capitalized by Chatime.
For a prospective Chatime franchisee, this means that any late payments to Chatime will incur interest charges. The specific rate will depend on the applicable legal limits, but could be as high as 1.5% per month, which is equivalent to an annual rate of 18%. This is a fairly standard practice in franchising, as franchisors need to ensure timely payments to maintain their own financial stability.
It is important for franchisees to manage their finances carefully and ensure that all payments to Chatime are made on time to avoid these interest charges. The fact that interest accrues daily and may be capitalized means that the total amount owed could increase rapidly if payments are not made promptly. Franchisees should also be aware of the highest rate allowed by law in their jurisdiction, as this could be lower than the 1.5% per month specified in the Franchise Disclosure Document.