What interest rate does Engel & Volkers charge on late payments, and how is it calculated?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.8 Interest: Franchisor will normally obtain payment at the time of settlement or closing (or as otherwise may be permitted herein), and for all other amounts due under this Agreement by direct debit from Franchisee's account.
In cases where payment at the time of settlement or closing or direct debit is not feasible and Franchisee falls more than ten (10) days into arrears with any payments due under the terms of this Agreement, Franchisee shall pay interest on the outstanding overdue balance at the maximum commercial contract interest rate permitted by law.
If there is no applicable legal maximum rate, interest will be
calculated at the rate of 4% above the prime rate of interest identified by Citibank, N.A. in New York City (or any successor to it) on the first day of each month that an amount is past due. This provision does not constitute consent to late payments or an agreement to extend credit. If Franchisee is delinquent in any required payment, Franchisor or its affiliates may apply any payment from Franchisee to any obligation due in whatever order and for whatever purposes as Franchisor determines, whether or not there is any contrary designation by Franchisee. In the event that Franchisee is eligible to receive any payments from Franchisor pursuant to an incentive program, Franchisor may apply such incentive payments to offset any of Franchisee's past due indebtedness to Franchisor. Franchisor may also set-off any amounts Franchisee or its owners owe Franchisor or its affiliates against any amounts Franchisor or its affiliates owe to Franchisee or its owners. Franchisor may also charge Franchisee interest at the above rate on any Royalty or National Marketing and Technology Fund balances for Gross Revenues that were not reported by Franchisee to Franchisor, or not reported at the time when due pursuant to Section 13.1.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, franchisees who are more than ten days late on any payments due under the terms of the Franchise Agreement will be charged interest on the outstanding overdue balance. The interest rate is the maximum commercial contract interest rate permitted by law. However, if there is no legally applicable maximum rate, the interest will be calculated at a rate of 4% above the prime rate of interest identified by Citibank, N.A. in New York City (or any successor to it) on the first day of each month that an amount is past due.
Engel & Volkers normally obtains payment at the time of settlement or closing, or via direct debit from the franchisee's account for all other amounts due under the agreement. The imposition of interest does not constitute an agreement to extend credit or a consent to late payments. Engel & Volkers has the right to apply any payment from the franchisee to any obligation due, regardless of any designation by the franchisee.
Furthermore, Engel & Volkers may apply any incentive payments due to the franchisee to offset any past due indebtedness. Engel & Volkers can also charge interest at the rate mentioned above on any Royalty or National Marketing and Technology Fund balances for Gross Revenues that were not reported by the franchisee or not reported when due.