What is the interest rate charged on past due royalty fees for a Craters & Freighters franchise?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Interest | 1.5% per month. | As due. | Interest will be charged on past due royalty fees. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, if a franchisee fails to pay royalty fees on time, the franchisor charges interest on the past due amount. The interest rate is 1.5% per month. This interest is charged on past due royalty fees and is due as it accrues.
This means that if a Craters & Freighters franchisee is late on their royalty payments, they will incur an additional charge of 1.5% of the overdue amount for each month the payment remains outstanding. This can significantly increase the amount owed over time, making it crucial for franchisees to manage their finances carefully and ensure timely payments.
It is common practice in franchising to charge interest on overdue amounts as a way to encourage timely payments and compensate the franchisor for the administrative costs and potential financial losses associated with collecting late payments. The specific interest rate can vary among franchise systems, but 1.5% per month is within the typical range.