What interest rate is applied to audit underpayments for a Cr3 American Exteriors franchise?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE | AMOUNT | DUE DATE (Note 2) | REMARKS |
|---|---|---|---|
| (Note 1) | |||
| Royalty Fee | The greater of (i) 6.0% of monthly Gross Revenue collected (the “Royalty Fee”) or (ii) $2,000.00 (the “Minimum Royalty Fee”). (Note 3) | By the 10th day of the month. | Royalty Fee’s start the first month in operation; however, the Minimum Monthly Royalty Fee, if applicable, will not begin until the 7th month of operation. Payments are due on |
| TYPE OF FEE | AMOUNT | DUE DATE (Note 2) | REMARKS |
| --- | --- | --- | --- |
| (Note 1) | |||
| Credit Card Processing Fee | Then current rate charged by third- party credit card processor. | At time of charge | You agree to pay a credit card processing fee if you pay any sums to us by credit card, to the extent permitted by law. |
| Insufficient Funds Fee | $50 per transaction. | As incurred | You agree to pay this fee to us if an electronic transfer or other payment from you to us is declined. |
| Interest | Highest applicable legal rate not to exceed 12% per annum on amounts you owe. | As incurred | Applies to all Royalty Fees, Technology Fee, Advertising Fund contributions and any other amounts that are past due for more than 5 days. |
| Audit Fee | Cost of audit plus 18% interest per annum on underpayment and $50 per month late payment. | As invoiced | Payable if an audit discloses an under reporting of Gross Revenues or underpayment to us by 2% or more. |
Source: Item 6 — OTHER FEES (FDD pages 18–20)
What This Means (2025 FDD)
According to Cr3 American Exteriors's 2025 Franchise Disclosure Document, if an audit reveals that a franchisee has underreported gross revenues or underpaid the franchisor by 2% or more, the franchisee is responsible for covering the cost of the audit. In addition to the audit cost, Cr3 American Exteriors will charge interest on the underpayment at a rate of 18% per annum.
Furthermore, Cr3 American Exteriors also imposes a late payment fee of $50 per month on any underpayment amounts. This means that franchisees need to ensure accurate reporting and timely payments to avoid these additional expenses.
Franchisees should maintain meticulous records of their gross revenues and payments to Cr3 American Exteriors to minimize the risk of underreporting and the associated audit, interest, and late payment fees. It is also important to understand the calculation of "Gross Revenues" as defined in Note 3, which includes all revenues derived directly or indirectly from the franchised business, excluding sales and use taxes.