What is the consequence if a Chicken Guy franchisee's payments are not received by the due date?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
an authorization in the form designated by Chicken Guy to initiate debit entries and/or credit correction entries to the Account for payments of the royalty fee and other amounts payable under this Agreement, including any interest charges; and (d) make sufficient funds available in the Account for withdrawal by electronic funds transfer no later than the Due Date for payment thereof.
- (3) Notwithstanding the provisions of this Section 7.F., Chicken Guy reserves the right to modify, at its option, the method by which Franchisee pays the royalty fee and other amounts owed under this Agreement, including advertising fees and interest charges, upon receipt of written notice from Chicken Guy.
- (4) Failure by Franchisee to have sufficient funds in the Account shall constitute a default of this Agreement pursuant to Section 22.B.(2). Franchisee shall not be entitled to set off, deduct or otherwise withhold any royalty fees, advertising contributions, interest charges or any other monies payable by Franchisee under this Agreement on grounds of any alleged non-performance by Chicken Guy of any of its obligations or for any other reason.
- G. Interest. If any payments by Franchisee due to Chicken Guy are not received by Chicken Guy by the Due Date, Franchisee, in addition to paying the amount owed, shall pay Chicken Guy 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 month or a portion of a month. Payment of interest by Franchisee on past due obligations is in addition to all other remedies and rights available to Chicken Guy pursuant to this Agreement or under applicable law.
- H. Partial Payments. No payment by Franchisee or acceptance by Chicken Guy of any monies under this Agreement for a lesser amount than due shall be treated as anything other than a partial
payment on account. Franchisee's payment of a lesser amount than due with an endorsement, statement or accompanying letter to the effect that payment of the lesser amount constitutes full payment shall be given no effect, and Chicken Guy may accept the partial payment without prejudice to any rights or remedies it may have against Franchisee.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, if any payments due from a franchisee are not received by Chicken Guy by the due date, the franchisee must pay interest on the amount owed. This interest accrues from the original due date until the payment is made. The interest rate will be the maximum rate permitted for this type of debt in the state where the franchised restaurant is located, but it will not exceed 1.5% per month or a portion of a month.
In addition to interest charges, failure to have sufficient funds in the designated account for electronic funds transfer constitutes a default of the Franchise Agreement. If a franchisee defaults in payment and fails to pay the owed monies within 10 days after receiving written notice of the default, the Franchise Agreement will terminate immediately, unless Chicken Guy provides written notice otherwise.
Chicken Guy can also demand that the franchisee pay any and all costs and expenses incurred by Chicken Guy in enforcing the terms of the Franchise Agreement, including collecting any monies owed by the franchisee to Chicken Guy. These costs and expenses include costs and commissions due to a collection agency, reasonable attorneys' fees, costs incurred in creating or replicating reports demonstrating Gross Sales of the Franchised Restaurant, court costs, expert witness fees, discovery costs and reasonable attorneys' fees and costs on appeal, together with interest charges on all of the foregoing.
Payment of interest by the franchisee on past due obligations is in addition to all other remedies and rights available to Chicken Guy under the Franchise Agreement or applicable law. Acceptance by Chicken Guy of payments other than as set forth in the Franchise Agreement does not constitute a waiver of Chicken Guy's right to demand payment in accordance with the requirements of the Franchise Agreement or a waiver by Chicken Guy of any other remedies or rights available to it pursuant to the Franchise Agreement or under applicable law.