How does Cornwell Quality Tools apply payments made by the dealer?
Cornwell_Quality_Tools Franchise · 2025 FDDAnswer from 2025 FDD Document
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- (c) All payments are intended to be applied first toward unpaid accrued time-price charges and then as a reduction of the unpaid principal balance, but Cornwell reserves the right to apply such payments in such order as it may determine. This note may be voluntarily pre-paid in part or in full at any time, without penalty, and is subject to involuntary acceleration, as set forth in paragraph 10 below.
- (d) If any payment is not made on or before its due date, additional time-price charges will be made at the rate of ________ % per annum and will continue to accrue on the unpaid balance as part of the Indebtedness described in paragraph 4 below. This will result in a slower principal reduction, to be deferred at Cornwell's option to increase the final scheduled payment, if it is not paid sooner and a default is not earlier declared. Conversely, payments received in advance of their due date will result in a faster principal reduction than scheduled, thus decreasing the final scheduled payment.
- (e) In addition, Cornwell may impose a weekly late charge of $10.00 each week that Dealer is three or more payments in arrears. The late charge will become an increase in the principal balance, and likewise become part of the Indebtedness, which will increase the amount of the final scheduled payment, if it is not paid sooner and a default is not earlier declared.
- (f) Although it is not the present practice, or any intention of Cornwell, to sell, assign, or discount to a third-party, in whole or in part, any note, contract or other instrument executed by the Dealer, Cornwell retains the right to do so.
- (g) The installments to be paid to Cornwell by the Dealer, pursuant to subparagraph (a) above, shall be paid by an ACH Debit for automatic payment, which will be automatically processed every Monday according to the schedule set forth in subparagraph 2(a) above, until the obligation is paid in full.
Source: Item 23 — RECEIPT (FDD pages 101–373)
What This Means (2025 FDD)
According to Cornwell Quality Tools' 2025 Franchise Disclosure Document, payments are generally applied first towards any unpaid accrued time-price charges (similar to interest) and then to reduce the unpaid principal balance. However, Cornwell Quality Tools retains the right to change the order in which payments are applied.
If a Cornwell Quality Tools dealer fails to maintain Franchise Developer status, Cornwell Quality Tools can apply payments to the outstanding debt in any order they choose, allocating amounts to either the principal or time-price charges as they see fit. This gives Cornwell Quality Tools considerable flexibility in managing the debt repayment, especially if a dealer's status changes.
Cornwell Quality Tools also details that late payments will incur additional time-price charges on the unpaid balance. Furthermore, if a dealer is three or more payments in arrears, Cornwell Quality Tools may impose a weekly late charge of $10, which will be added to the principal balance, increasing the overall debt. Payments made in advance of their due date will result in a faster reduction of the principal balance, decreasing the final scheduled payment. These installments are to be paid via ACH Debit for automatic payment, which will be automatically processed every Monday.