What interest rate does Closet Storage Concepts charge on overdue amounts?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
| circumstances | |||
|---|---|---|---|
| Bank Charges and Administrative Costs | Our then current fee (currently $50 per occurrence). | Upon invoice | We may charge fees to cover bank charges and administration costs if an electronic funds transfer attempt is unsuccessful or you close your operating account, or any check or other payment is returned not paid. |
| De-Identify | Our costs | As incurred | If you don't de-\nidentify your Franchised Business following\nexpiration or termination of the Franchise Agreement, we may do so at your expense and charge you for our costs. |
| BIZTRAX CRM Software | Then-current fee (currently $1,200 per year). | Annually | We will collect this fee. |
| CAD Design Software Keys updates | Then-current cost (currently $50-100 annually) | As incurred | Annual Service/Updates for the proprietary design software keys used in the Franchised Business. This fee is subject to change based on changes in operating |
| Collection Costs, Attorney's Fees and Interest | Interest on overdue amounts from the due date until paid at the lesser of 18% interest per year or the highest lawful interest rate. Costs of collection, attorneys' fees and court costs. | As incurred | See Note (5) |
Source: Item 6 — OTHER FEES (FDD pages 13–18)
What This Means (2025 FDD)
According to Closet Storage Concepts's 2025 Franchise Disclosure Document, the interest rate charged on overdue amounts is the lesser of 18% per year or the highest lawful interest rate. This interest accrues from the due date until the overdue amount is paid in full.
In practical terms, this means that if a Closet Storage Concepts franchisee fails to pay fees or other amounts owed to the franchisor on time, they will be subject to interest charges. The specific interest rate will depend on state law, but it will not exceed 18% annually. For example, if a franchisee owes $1,000 and the highest lawful interest rate in their state is 10%, Closet Storage Concepts will charge 10% interest per year on the unpaid balance. However, if the highest lawful rate is 20%, the interest rate will be capped at 18%.
In addition to interest on overdue amounts, Closet Storage Concepts also charges franchisees for collection costs, attorney's fees, and court costs associated with recovering unpaid amounts. This is a fairly standard practice in franchising, as franchisors seek to protect their revenue streams and ensure timely payments from franchisees. Franchisees should be aware of these potential costs and ensure they have sufficient capital and financial management skills to meet their obligations to Closet Storage Concepts on time.