What is the maximum interest rate that Cr3 American Exteriors can charge on overdue amounts?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
non-refundable.
ITEM 6 OTHER FEES
| 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. |
| TYPE OF FEE (Note 1) | AMOUNT | DUE DATE (Note 2) | REMARKS |
| ------------------------------- | -------------------------------------------------------------------------------------------------------- | ------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| 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 Revenue |
Source: Item 6 — OTHER FEES (FDD pages 18–20)
What This Means (2025 FDD)
According to Cr3 American Exteriors's 2025 Franchise Disclosure Document, the franchisor can charge interest on overdue amounts. Specifically, Cr3 American Exteriors can charge the highest applicable legal interest rate, but it cannot exceed 12% per annum. This interest applies to all Royalty Fees, Technology Fees, Advertising Fund contributions, and any other amounts that are past due for more than 5 days.
This means that if a Cr3 American Exteriors franchisee is late on payments such as royalty fees, technology fees, or advertising fund contributions by more than 5 days, they will incur interest charges. The interest rate will be the highest legally permissible rate, but it is capped at 12% per year. For example, if a franchisee owes $1,000 in royalty fees and it is 10 days overdue, interest will be calculated on that $1,000 at the applicable rate, up to the 12% maximum.
Franchisees should be aware of these terms to avoid incurring additional costs. It is common practice for franchisors to charge interest on overdue amounts to encourage timely payments. Franchisees should ensure they understand the due dates for all fees and contributions to avoid these charges. Additionally, the 18% interest charged on underpayments discovered during an audit is significantly higher than the standard interest rate for overdue amounts, highlighting the importance of accurate financial reporting.