What is the interest rate charged by Craters & Freighters on franchisee balances converted to a note receivable?
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 Craters & Freighters' 2025 Franchise Disclosure Document, Craters & Freighters may convert unpaid franchisee balances into a note receivable at their discretion. These notes have payment terms of 24 to 36 months and accrue interest at a rate of 6%.
For a prospective Craters & Freighters franchisee, this means that if you have difficulty paying franchise support fees or royalties, Craters & Freighters might offer you the option to convert that debt into a note receivable. This could provide some flexibility in managing your finances, as it allows you to pay off the debt over a longer period.
However, it is important to note that default on these notes receivable will result in the termination of the franchise agreement between Craters & Freighters and the franchisee. 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. Franchisees should consider this when evaluating their ability to meet their financial obligations to Craters & Freighters.