Under what circumstances does Cinch I.T. levy a late fee, and what is the amount?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
| TYPE OF FEE1 | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| to client | must pay us for our time and any compensation (i.e., replacement product) given to clients. | ||
| Audits | Cost of audit plus interest on underpayment | As incurred | Payable only if audit shows understatement is willful or if 2% or more of gross sales for a two month period. |
| Interest | Interest on overdue payment | As incurred | Interest rate will be 1.5% per month or if the maximum interest rate permitted by state law is less, then interest will be charged at the lesser allowed rate. Interest begins from the date payment was due. |
| Late Fee | $100 per occurrence plus interest | On demand, but only if you are delinquent in your payments to us or otherwise violate an obligation under the Franchise Agreement | Payable the day after payment or other event (Ex: a required report) is due, in addition to the interest. |
| Transfer, Assignment | $10,000 | Time of transfer | Payable if you sell your franchise. No fee charged if you transfer franchise to a corporation or other entity you control. |
| Transfer Fee – Development Agreement | $5,000 for each unopened Franchise; $10,000 for each open and operating Franchised Business. | Time of transfer | Payable if Multi-Unit Developer sells its franchise. No fee charged if you transfer franchise to a corporation or other entity you control. |
| Multi-Unit Extension Fee – Development Agreement | $5,000 per extension | As incurred | Payable if Multi-Unit Developer desires to extend a Development Period. |
| Renewal | $5,000 | Time of renewal | New franchise agreement, which may |
Source: Item 6 — OTHER FEES (FDD pages 14–20)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, a late fee of $100 per occurrence, plus interest, is levied if a franchisee is delinquent in their payments to Cinch I.T. or otherwise violates an obligation under the Franchise Agreement. This fee is payable on demand, specifically the day after the payment or other required event, such as submitting a report, is due.
This means that if a Cinch I.T. franchisee fails to make a payment on time or does not fulfill any other obligation outlined in the Franchise Agreement, they will incur a $100 late fee in addition to any interest accrued on the overdue amount. The interest charged on overdue payments is 1.5% per month, or the maximum interest rate permitted by state law if it is less than 1.5% per month.
For a prospective franchisee, it's crucial to understand all obligations under the Franchise Agreement to avoid incurring late fees. This includes timely payments and adherence to all operational and reporting requirements. The late fee can add up quickly, especially when combined with interest on the outstanding amount, so maintaining compliance is essential for managing costs.
It is also important to note that all fees are uniformly imposed and payable only to Cinch I.T. or its designee and are payable through Electronic Funds Transfer. Franchisees must authorize their bank to accept automatic withdrawals for all fees. This means that franchisees need to ensure that their bank accounts always have sufficient funds to cover the fees to avoid late payments and associated penalties.