How are prepayments applied to the Corcoran Note?

According to Corcoran's 2025 Franchise Disclosure Document, franchisees can prepay the Corcoran Note in whole or in part on any date without incurring any premium or penalty. However, no partial prepayment will extend or postpone the due date of any subsequent installment payment, nor will it change the amount of the installment payment. All prepayments will be applied without any specific notation on the note itself.

This policy benefits franchisees by providing flexibility in managing their debt obligations. Franchisees who have extra funds available can reduce their principal balance without being penalized, potentially saving on future interest payments. However, it's important to note that partial prepayments do not alter the existing payment schedule, meaning franchisees must continue to make the originally agreed-upon installment payments until the note is fully paid off.

This approach to prepayments is fairly standard in lending agreements. The absence of prepayment penalties is a positive aspect for franchisees, as some lenders charge fees for early repayment. The fact that prepayments are applied without notation simplifies the process but also means that franchisees need to keep their own records of prepayments to track their remaining balance accurately.