What happens if a Craters & Freighters franchisee defaults on a note receivable?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
31, 2024 and 2023, respectively.
At the Company's discretion, unpaid franchisee balances may be converted to a note receivable with payment terms between twenty-four and thirty-six months, accruing interest at six percent. As of December 31, 2024, there was $16,991 in outstanding notes receivable from franchisees relating to unpaid balances, of which $11,662 is due within one-year and $5,329 is due in 12-24 months. As of December 31, 2023, there were no Franchisee accounts with past due balances converted to notes receivable. Default on notes receivable will result in a termination of the related franchise agreements b
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, if a franchisee defaults on a note receivable, the franchise agreement between Craters & Freighters and the franchisee will be terminated.
Craters & Freighters may, at its discretion, convert unpaid franchisee balances into a note receivable. The payment terms for these notes typically range from 24 to 36 months, with interest accruing at a rate of 6%. As of December 31, 2024, the total outstanding notes receivable from franchisees amounted to $16,991. Of this amount, $11,662 is due within one year, and $5,329 is due within 12-24 months. As of December 31, 2023, there were no franchisee accounts with past due balances converted to notes receivable.
This policy highlights the importance of franchisees maintaining timely payments of their financial obligations to Craters & Freighters. Defaulting on a note receivable can have severe consequences, including the loss of the franchise. Prospective franchisees should carefully consider their financial stability and ability to meet payment obligations before entering into a franchise agreement with Craters & Freighters.