What is the maximum interest rate Cinnabon charges on past due amounts?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee1, 5 | Amount | Date Due | Remarks |
|---|---|---|---|
| Obligation from you and (i) contribute it to the Ad Fund, (ii) conduct national, regional, or local advertising, (iii) spend it on local advertising, or (iv) contribute it to your Advertising Cooperative. | |||
| Promotions and Advertising Materials | Up to 110% of our or our affiliates' actual costs and expenses related to the goods you purchase from us or them. | As incurred | You will participate at your own cost in temporary or permanent promotional campaigns that we establish (e.g., limited time offers, gift cards, coupons, loyalty programs, customer relationship management, and other supplemental marketing programs), which may be applicable to the System as a whole or to specific advertising market areas, and promotional programs your Advertising Cooperative establishes. We may require or permit you to purchase items from us or our affiliates necessary to participate in such campaigns, such as counter cards posters, banners, signs, photographs, loyalty program rewards, give-away items, and gift cards. |
| Insufficient Funds Fee | Up to 110% of our or our affiliates' actual costs and expenses | On invoice | If we draft money from your account under our electronic funds transfer ("EFT") or draft system, and there are insufficient funds to cover the draft, we may charge this fee, which will include any bank return charges. This fee is in addition to interest on the amount due. |
| Interest | The lesser of 1.5% per month or the maximum legal interest rate | On invoice | You must pay us or our affiliates interest on any amounts past due to us or our affiliates. |
Source: Item 6 — OTHER FEES (FDD pages 31–45)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, franchisees may be charged interest on any past due amounts owed to Cinnabon or its affiliates. The interest rate is the lesser of 1.5% per month or the maximum legal interest rate. This interest is due on invoice.
For a prospective Cinnabon franchisee, this means that failing to pay invoices on time can result in significant interest charges. The 1.5% monthly rate is equivalent to an 18% annual interest rate, which is a substantial penalty. However, Cinnabon specifies that they will not charge more than the maximum legal interest rate, which may be lower depending on applicable laws.
Franchisees should be aware of this policy and ensure timely payments to avoid incurring these charges. It is also important to understand what constitutes the 'maximum legal interest rate' in their specific jurisdiction, as this could vary. This is a fairly standard practice in franchising, as franchisors need to ensure timely payments to maintain their own financial stability.