Is there a maximum interest rate that Chocolate Bash can charge on late payments?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
4.10 Payment Terms.
- (c) Late Fees and Interest. If Franchisee does not make a payment on time, Franchisee shall pay a $100 "late fee" plus interest on the unpaid amount at a rate equal to 18% per year (or, if such payment exceeds the maximum allowed by law, then interest at the highest rate allowed by law).
- (d) Insufficient Funds. CB Franchising may charge $30 for any payment returned for insufficient funds (or, if such amount exceeds the maximum allowed by law, then the fee allowed by law).
- (e) Costs of Collection. Franchisee shall repay any costs incurred by CB Franchising (including reasonable attorney fees) in attempting to collect payments owed by Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, if a franchisee fails to make payments on time, they will incur a $100 late fee. Additionally, Chocolate Bash will charge interest on the unpaid amount at a rate of 18% per year. However, if this interest rate exceeds the maximum allowed by law, the interest rate will be adjusted to the highest rate legally permissible.
This means that while Chocolate Bash specifies an 18% annual interest rate on late payments, this rate is capped by applicable law. Franchisees will only be charged 18% if that rate is legally permissible in their jurisdiction; otherwise, the legally সর্বোচ্চ rate will apply. This protects franchisees from excessively high interest charges that might violate local regulations.
In addition to late fees and interest, Chocolate Bash may also charge a $30 fee for any payment returned due to insufficient funds, unless the legally allowed maximum is lower, in which case the legal maximum will be charged. Franchisees are also responsible for repaying any costs Chocolate Bash incurs while attempting to collect overdue payments, including reasonable attorney fees. These terms are typical in franchise agreements to protect the franchisor's revenue stream.