Does the Gold Star franchise agreement specify any limits on the amount that can be debited for interest?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
All amounts payable by FRANCHISEE to the COMPANY or any affiliate under or in connection with this Agreement shall be made without set-off or deduction for any reason whatsoever (including but not limited to any alleged breach by the COMPANY of any obligations to FRANCHISEE), and if not paid when due shall bear interest from the date due until paid at the rate of one and one-half percent (1.5%) per month, or the maximum rate permitted by law, whichever is less.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, the franchise agreement specifies a limit on interest for late payments. Specifically, any amounts not paid when due will bear interest from the due date until paid at a rate of 1.5% per month, or the maximum rate permitted by law, whichever is less.
This means that if a Gold Star franchisee fails to make timely payments to Gold Star, the outstanding balance will accrue interest. However, the interest rate is capped at either 1.5% per month or the highest rate legally allowed, providing a limit to the potential interest charges. This protects the franchisee from excessively high interest rates that might otherwise be imposed.
Most franchise agreements include provisions for late payment interest, and the Gold Star agreement is fairly standard in this regard. The inclusion of a legal maximum protects the franchisee, ensuring compliance with applicable laws and preventing the franchisor from imposing an unreasonably high interest rate. Franchisees should be aware of this clause and ensure timely payments to avoid incurring interest charges.