What is the interest rate applied to late payments to Checkersrallys if there is no legal maximum?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
- 6.04 Interest On Late Payments.All amounts which you owe us or any of our Affiliates for any reason, including amounts payable into the NPF (as provided in Sections 3.05 and 10.01), shall bear interest accruing as of their original due date at the maximum interest rate permitted by law, If there is no applicable legal maximum rate, interest will be calculated at the rate of four percent (4%) above the prime rate of interest on the first day of each month for the past due amount, as published in The Wall Street Journal.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees who make late payments to Checkersrallys or its affiliates will be charged interest. The interest rate applied to these late payments depends on whether there is a legally permitted maximum interest rate in effect.
If a legal maximum interest rate exists, Checkersrallys will charge the maximum rate allowed by law. However, if there is no legal maximum interest rate, the interest will be calculated at a rate of four percent (4%) above the prime rate of interest. The prime rate is determined on the first day of each month and is based on the rate published in The Wall Street Journal.
This means that franchisees could face significant interest charges on overdue amounts, especially if prime rates are high and there is no legal limit on interest rates. Franchisees should prioritize timely payments to avoid these additional costs. It is also important to note that failure to pay all amounts when due constitutes grounds for termination of the Franchise Agreement.