What is the maximum interest rate that Hardees franchisees may be charged on overdue payments?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
If any payments by Franchisee due to HR are not received by HR by the date due, Franchisee, in addition to paying the amount owed, shall pay HR 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 Restaurant is located, not to exceed 1.5% per fiscal period (as defined by HR from time to time) or a portion of a fiscal period. Payment of interest by Franchisee on past due obligations is in addition to all other remedies and rights available to HR pursuant to this Agreement or under applicable law.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, if a franchisee fails to make payments by the due date, Hardees will charge interest on the overdue amount. The interest rate will be the maximum rate permitted for this type of debt in the state where the franchised restaurant is located. However, this rate will not exceed 1.5% per fiscal period, as defined by Hardees. This interest charge is in addition to any other remedies and rights Hardees has under the franchise agreement or applicable law.
This means that if a Hardees franchisee is late on payments, they will incur interest charges on the outstanding balance. The specific interest rate will depend on state law, but Hardees has capped it at 1.5% per fiscal period. Franchisees need to be aware of this potential cost and ensure timely payments to avoid these charges. The fiscal period is defined by Hardees, so franchisees should clarify the length of the fiscal period to fully understand the potential interest accrual.
It is common practice in franchising for franchisors to charge interest on overdue payments. This policy incentivizes franchisees to make timely payments and compensates the franchisor for the time value of money and the administrative costs associated with collecting late payments. The 1.5% cap per fiscal period provides some certainty for franchisees, but they should still prioritize meeting payment deadlines to avoid these additional expenses.