Is the interest rate charged by Fly To Fit on late payments capped by law?

According to Fly To Fit's 2024 Franchise Disclosure Document, the interest rate charged on late payments is subject to legal limitations. Specifically, if a franchisee fails to make payments on time, Fly To Fit will charge a $100 late fee, along with interest on the unpaid amount. The standard interest rate is 18% per year. However, the agreement specifies that if this 18% rate exceeds the maximum interest rate allowed by law, the interest charged will be the highest rate legally permissible.

This provision protects the franchisee from potentially usurious interest rates that might otherwise be imposed. It ensures that Fly To Fit remains compliant with applicable laws regarding interest rate caps, which can vary by jurisdiction. Franchisees should be aware of the potential for late fees and interest charges and understand that the actual interest rate applied will depend on the legal limits in their specific location.

For a prospective Fly To Fit franchisee, this means that while late payments will incur penalties, those penalties will not exceed what is legally allowed in their area. It is advisable to understand the specific laws regarding interest rate caps in the relevant jurisdiction to fully grasp the potential financial implications of late payments. This clause provides a degree of protection, ensuring that Fly To Fit operates within legal boundaries regarding financial penalties.