At what rate does interest accrue on past due amounts owed to Chem Dry?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
o the Franchise Agreement associated with this Business Note in full within six (6) months of the date of this Business Note, CDI will discount the total due for the Initial License Fee by ten percent (10%). No prepayments of this Business Note shall affect the obligation of Borrower to make the
payments of installments of the principal and interest required by the first paragraph hereof until this Business Note shall have been paid in full. All amounts due by Borrower to CDI shall be subject to a one-time late fee of $100.00 and bear interest after their due date at t
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, any amounts due to Chem Dry will incur a one-time late fee of $100.00. After the due date, these amounts will accrue interest at the highest applicable legal rate for open account business credit in the franchisee's state of domicile, but will not exceed 1.5% per month.
After the maturity of the Business Note, whether through acceleration or other means, Chem Dry has the right to collect all payments due, and interest will accrue on the principal balance at a fixed rate of 18% per annum. Additionally, a fee of $40.00 will be assessed for each installment returned unpaid due to reasons such as NSF or account closure.
This means that if a Chem Dry franchisee fails to make timely payments, they will face a late fee and accrue interest on the outstanding balance. The interest rate can vary depending on state laws but is capped at 1.5% per month initially. However, after the Business Note matures, the interest rate increases to a fixed 18% per year, which could significantly increase the total amount owed. Franchisees should be aware of these financial implications and ensure timely payments to avoid these additional costs.