For Crowne Plaza, what is the interest rate applied to unpaid amounts, and from what date does the interest accrue?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
If any amounts under this License are not paid when due, such non-payment shall constitute a breach of this License and, in addition, such unpaid amounts will accrue interest beginning on the first day of the month following the due date at 1½% per month or the maximum interest permitted by applicable law, whichever is less.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza FDD, if a franchisee fails to make payments when due, the unpaid amounts will accrue interest. This interest begins accruing on the first day of the month following the date the payment was originally due. The interest rate applied to these unpaid amounts is 1½% per month, but if applicable law sets a maximum interest rate that is lower, the legal maximum will be used instead.
For a prospective Crowne Plaza franchisee, this means that late payments can result in significant additional costs. The 1½% monthly interest rate is equivalent to an annual interest rate of 18%, which is a substantial penalty for late payments. Franchisees should ensure they have sufficient financial planning and cash flow management in place to avoid late payment penalties.
It's important to note that Crowne Plaza has the right to apply any payments received to any outstanding amounts owed by the franchisee. This means that if a franchisee has multiple outstanding debts, Crowne Plaza can choose which debt to apply a payment to, potentially leaving the debt with the highest interest rate outstanding for longer. Franchisees should maintain clear communication with Crowne Plaza regarding their payment obligations to avoid any misunderstandings or disputes.