What is the annual interest rate applied to the note for an Exit franchise?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Interest accrues on the note at 3.00% per annum.
7.2. Interest, Late Charges and Overdue Amounts
Franchisee shall pay Subfranchisor and EXIT, as applicable, interest at the annual rate equal to the Prime Rate published from time to time in the Money Rates section of the Wall Street Journal plus five percent (5%), on all amounts due under this Agreement that are more than thirty (30) days late. Franchisee shall also pay Subfranchisor and EXIT, as applicable, a late fee of five percent (5%) of the amount of the late payment, if a payment is late.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, several notes payable to Exit Realty Corp. International accrue interest at an annual rate of 3.00%. These notes, which were subsequently amended on September 12, 2023, finance franchise territories in Wisconsin, Minnesota, Michigan, and Illinois. The monthly payments for these territories range from $1,177 to $7,546, with final payments due in September 2033.
Additionally, for overdue amounts, Exit franchisees may be subject to a different interest rate. Specifically, interest accrues at the annual rate equal to the Prime Rate published in the Money Rates section of the Wall Street Journal plus five percent (5%) on all amounts due under the Franchise Agreement that are more than thirty (30) days late. A late fee of five percent (5%) of the amount of the late payment will also be applied.
Prospective franchisees should consider these interest rates and late payment terms when evaluating the financial obligations associated with an Exit franchise. Understanding the terms of the notes payable and the penalties for late payments is crucial for managing the financial health of the franchise.