For a Cool Binz franchise, how are monthly installment payments applied to the Promissory Note?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
it losses | (1,214) | (1,115) | (1,112) | | Less: current portion | 578 | 1,027 | 1,972 | | Long-Term Portion | $793 | $948 | $2,435 |
EXHIBIT 2 PAYMENT SCHEDULE
EXHIBIT A-5 TO THE DISCLOSURE DOCUMENT
PROMISSORY NOTE
| 2024 | 2023* | |
|---|---|---|
| Balance, January 1, | $1,115 | $1,746 |
| Additions charged to expense | 358 | 292 |
| Deductions (write-offs) | (259) | (923) |
| Balance, December 31, | $1,214 | $1,115 |
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- Monthly installments shall be applied first upon interest and the balance upon principal. This Promissory Note may be prepaid in full at any time without restriction or penalty.
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- Should any monthly installment not be paid when due, then the Holder shall elect to either (a) require that the whole sum of the remaining principal and interest shall become due immediately and payable upon notice to the Undersigned or (b) charge a late fee of 5% or $50, per week, whichever sum is greater. All unpaid amounts owing on this Promissory Note shall immediately become due and payable at the option of Holder without notice or demand upon the occurrence of any of the following events of default: (i) the default of any provision of the Promissory Note; or (ii) the death, dissolution, insolvency (however expressed or indicated) or the filing of a petition in bankruptcy, reorganization or for the adjustment of debts for, by or against the Undersigned; (iii) the sale of substantially all of the Undersigned's stock or assets; (iv) the Undersigned's failure to permit Holder to collect amounts via EFT.
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- The Undersigned hereby waives presentation for payment, demand, notice of nonpayment, protest, and all other demands and notices required by law (statutory or otherwise). In the event that the undersigned should default under this Promissory Note, and legal proceedings are commenced to collect the indebtedness evidenced hereby, the undersigned agrees to pay all costs and expenses, including reasonable att
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, monthly installment payments on the Promissory Note are first applied to cover the interest accrued, with the remaining balance then being applied to reduce the principal amount of the note. This means that in the initial months of repayment, a larger portion of the payment will go towards interest, and as the loan is paid down, more of the payment will go towards the principal. The Promissory Note can be prepaid in full at any time without any restrictions or penalties.
If a monthly installment is not paid when due, Cool Binz has the option to either demand immediate payment of the entire remaining principal and interest or charge a late fee. The late fee is calculated as the greater of 5% or $50 per week. Additionally, all unpaid amounts become immediately due if there is a default on any provision of the Promissory Note, or in the event of the franchisee's death, dissolution, insolvency, bankruptcy, sale of assets, or failure to allow Cool Binz to collect amounts via EFT (electronic funds transfer).
The franchisee waives certain legal rights related to payment demands and notices. If legal proceedings are necessary to collect the debt, the franchisee is responsible for all associated costs, including reasonable attorney fees. Furthermore, if the franchisee intends to transfer or assign their franchise rights to a third party before the Promissory Note is fully paid off, the note must be paid in full before Cool Binz will approve the transfer or assignment. The laws of the State of Michigan govern the Promissory Note's validity, construction, interpretation, and enforceability.