What is the interest rate charged on late payments to Ella Cafe, and is there a legal maximum?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee1 | Amount | Due Date | Remarks |
|---|---|---|---|
| Late Fee | $100 plus interest on the unpaid amount at a rate equal to 18% per year (or, if such payment exceeds the maximum allowed by law, then interest at the highest rate allowed by law) | On demand | We may charge a late fee if you fail to make a required payment when due. |
Source: Item 6 — OTHER FEES (FDD pages 10–15)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, if a franchisee fails to make a required payment when it is due, Ella Cafe may charge a late fee. This late fee consists of $100 plus interest on the unpaid amount. The interest rate is set at 18% per year.
However, the FDD also specifies a condition regarding the interest rate. If the 18% interest rate exceeds the maximum rate allowed by law, then the interest charged will be the highest rate legally permitted. This protects the franchisee from illegally high interest charges while ensuring Ella Cafe can still collect interest on overdue amounts.
This clause indicates that Ella Cafe aims to comply with all applicable laws and regulations regarding interest rates on late payments. Prospective franchisees should be aware of this policy and ensure they understand their obligations for timely payments to avoid incurring late fees and interest charges. It would be prudent to understand what the maximum interest rate allowed by law is in their specific jurisdiction.