What happens if a Craters & Freighters franchisee defaults on notes 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 the 2025 Craters & Freighters Franchise Disclosure Document, if a franchisee defaults on notes receivable, the franchise agreement between the franchisee and Craters & Freighters will be terminated.
Craters & Freighters may, at its discretion, convert unpaid franchisee balances into a note receivable. These notes have payment terms of 24 to 36 months and accrue interest at a rate of 6%. As of December 31, 2024, the total outstanding notes receivable from franchisees relating to unpaid balances was $16,991. Of this amount, $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.
This policy highlights the importance of franchisees maintaining timely payments of fees and royalties to Craters & Freighters. Defaulting on a note receivable is a serious matter that can lead to the termination of the franchise agreement, resulting in the loss of the business and the initial investment. Prospective franchisees should carefully consider their financial stability and ability to manage their financial obligations before entering into a franchise agreement with Craters & Freighters.