What interest fee may Craters & Freighters subject to late royalty payments?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
Accounts and Notes Receivable
Accounts and notes receivable consist of current and past due franchise support fees and royalties. Late payments may be subjected to a one and a half percent interest fee per month on the total amount of late royalty payment. The Company received interest from royalty payments totaling $3,424 and $2,604 for the years ended December 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 FDD, late payments of franchise support fees and royalties may incur an interest fee. Craters & Freighters may charge a one and a half percent interest fee per month on the total amount of the late royalty payment.
For a prospective franchisee, this means that if you are late on your royalty or franchise support fee payments, Craters & Freighters has the right to charge you 1.5% interest per month on the overdue amount. This can add up quickly, so it's important to ensure timely payments to avoid these charges.
The FDD also notes that Craters & Freighters received interest from royalty payments totaling $3,424 and $2,604 for the years ended December 31, 2024 and 2023, respectively. This indicates that some franchisees have been late on payments and incurred these interest fees. Additionally, Craters & Freighters has the option to convert unpaid franchisee balances into a note receivable, with interest accruing at 6%, and payment terms between 24 and 36 months. Defaulting on these notes receivable can lead to termination of the franchise agreement.