For Hardees franchises, what is the maximum interest rate a franchisee may be charged on late payments to CKR?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.4 Interest. If any payments by Franchisee due to CKR are not received by CKR by the due date, Franchisee, in addition to paying the amount owed, shall pay CKR interest on the amount owed from the date due until paid at the maximum rate permitted for indebtedness of this nature in the state in which the Franchised Restaurants are located or 18% per annum calculated on a daily basis, whichever is less.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, if a franchisee fails to make payments to CKR by the due date, they will incur interest charges on the outstanding amount. The interest rate will be the lesser of two options: the maximum rate permitted for indebtedness of this nature in the state where the franchised restaurant is located, or 18% per annum. The interest is calculated on a daily basis from the date the payment was originally due until it is paid.
For a prospective Hardees franchisee, this means that late payments can result in significant additional costs. The actual interest rate charged will depend on state law, but it will not exceed 18% per year. It is important for franchisees to understand the specific regulations regarding interest rates in their state to anticipate potential late payment penalties.
This type of clause is fairly standard in franchise agreements. It incentivizes timely payments and compensates the franchisor for the time value of money and the administrative costs associated with collecting late payments. Franchisees should prioritize managing their cash flow to avoid these charges and maintain a positive financial relationship with CKR.