When does Exit begin charging interest on past due amounts, and at what rate?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| in one or more transfers— transfer fee equal to 10% of the then-current Initial Fee (not to exceed 25% of the Initial Franchise Fee paid). | |||
|---|---|---|---|
| Minor Transfer. Transfer of less than a 50% interest of the Franchise, or less than 50% interest in the equity or voting rights in the entity that owns or controls the Franchise—$500. See Note6 | |||
| Late Fee | 5% of the late payment. | If a payment is more than 30 days late. | Payable by you to EXIT and EXIT Realty Upper Midwest |
| Interest | Past due amounts are subject to interest at the prime interest rate plus 5%, or the highest contract annual percentage rate allowed by applicable law, whichever is less. | Commencing 30 days after payment is late. | Payable by you to EXIT Realty Upper Midwest |
Source: Item 6 — OTHER FEES (FDD pages 13–15)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, past due amounts are subject to interest. This interest begins accruing 30 days after the payment is late. The interest rate applied will be the prime interest rate plus 5%, or the highest contract annual percentage rate allowed by applicable law, whichever is less. This interest is payable to EXIT Realty Upper Midwest.
For a prospective Exit franchisee, this means that failing to make timely payments can result in significant additional costs. The interest rate is not fixed but is tied to the prime rate, which can fluctuate, adding uncertainty to the cost of late payments. It is important to note that the interest rate will not exceed the maximum rate allowed by law, providing some protection against excessively high rates.
Franchisees should prioritize timely payments to avoid these interest charges. Understanding the due dates for all fees and setting up systems to ensure payments are made on time is crucial. Given that the interest is payable to EXIT Realty Upper Midwest, franchisees should clarify with them the specific procedures for payment and any potential grace periods before interest is applied.
It is also important to note that this interest charge is separate from the late fee, which is 5% of the late payment if a payment is more than 30 days late. Therefore, franchisees could potentially incur both a late fee and interest charges on the same overdue amount, further increasing the financial burden of late payments.