Is a Crave franchisee entitled to withhold payments due to Crave under the Agreement based on alleged non-performance by Crave?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
4.5 Interest on Overdue Amounts
You shall not be entitled to withhold payments due us under this Agreement on grounds of alleged non-performance by us hereunder. Any payment or report not actually received by us on or before its due date shall be deemed overdue. Time is of the essence with respect to all payments to be made by you to us. All unpaid obligations under this Agreement shall bear interest from the date due until paid at the greater of (i) eighteen percent (18%) per annum; or (ii) the maximum rate allowed by applicable law. Notwithstanding anything to the contrary contained herein, no provision of this Agreement shall require the payment or permit the collection of interest in excess of the maximum rate allowed by applicable law. If any excess of interest is provided for herein, or shall be adjudicated to be so provided in this Agreement, the provisions of this paragraph shall govern and prevail, and neither you nor your Principals shall be obligated to pay the excess amount of such interest. If for any reason interest in excess of the maximum rate allowed by applicable law shall be deemed charged, required or permitted, any such excess shall be applied as a payment and reduction of any other amounts which may be due and owing hereunder, and if no such amounts are due and owing hereunder then such excess shall be repaid to the party that paid such interest.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, a franchisee is not entitled to withhold payments from Crave based on alleged non-performance by Crave. The franchise agreement stipulates that all payments must be made on time.
Specifically, any payment not received by Crave on or before its due date is considered overdue. All unpaid obligations bear interest from the due date until paid. The interest rate is the greater of 18% per annum or the maximum rate allowed by applicable law.
This clause emphasizes the importance of timely payments to Crave and protects Crave's revenue stream. However, the agreement also clarifies that no provision requires or permits the collection of interest exceeding the maximum rate allowed by law. If such excess interest is charged, it will be applied to reduce other amounts owed or refunded to the franchisee.