What is the maximum interest rate charged on late Cinnaholic Royalty Fee payments?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
s or contributions required to be paid to Franchisor or any Advertising Cooperative hereunder must be paid by automated bank draft or other reasonable means necessary to ensure payment of such fees are received by Franchisor or the appropriate Advertising Cooperative. Franchisee agrees to comply with Franchisor's payment instructions.
- 5.4. Late Payments and Insufficient Funds. All overdue payments for Royalty Fees, Advertising Fees and other fees required to be paid hereunder shall bear interest from the date due at the rate specified by Franchisor from time to time, up to the highest rate permitted by the law, but in no event shall such rate exceed 18% per annum. Interest shall accrue on all late payments regardless of whether Franchisor exercises its right to terminate this Agreement as provided for herein. In addition to its right to charge interest as provided herein, Franchisor may charge Franchisee a $100.00 late payment fee for all s
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, overdue payments for Royalty Fees, Advertising Fees, and other fees will incur interest from the due date. The interest rate is determined by Cinnaholic but will not exceed the highest rate permitted by law, with a maximum of 18% per annum. This interest applies regardless of whether Cinnaholic chooses to terminate the Franchise Agreement due to the late payments.
In addition to interest charges, Cinnaholic may also impose a $100 late payment fee for overdue amounts. Furthermore, a $100 insufficient funds fee can be charged for any payment method, such as a check or automated bank draft, that is not honored by the franchisee's bank. Cinnaholic retains the right to offset any amounts the franchisee owes against any amounts Cinnaholic may owe the franchisee.
This policy encourages franchisees to make timely payments to avoid incurring interest and additional fees. The ability to charge interest on overdue payments is a common practice in franchising, designed to compensate the franchisor for the financial disruption caused by late payments and to incentivize franchisees to adhere to the payment schedule outlined in the franchise agreement.