What is the maximum interest rate Hck Hot Chicken may charge on past due amounts?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
) for the amount of all Continuing Royalties, Brand Fund Contributions, technology fees, training and certification fees, convention fees, inspection and evaluation fees, late fees, interest charges, past due fees, and other fees and charges owed by Owner or a company controlled by Owner to HCK each time Owner, or a company controlled by Owner, does not otherwise pay its fees when due or an EFT payment by Owner is unsuccessful.
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- HCK may charge the following "Late Fee" and interest to Owner's credit card account, with or apart from the actual Continuing Royalties, Brand Fund Contributions, technology fees, training and certification fees, convention fees, inspection and evaluation fees, and other fees and charges as specified above. The Late Fee is $100 per incident. If any payment required to be made by Owner to HCK under
Source: Item 22 — CONTRACTS (FDD pages 54–55)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, if a franchisee fails to make payments on time, Hck Hot Chicken has the right to charge interest on the overdue amount. The interest rate will be the lesser of two options: a daily equivalent of 12% per year simple interest, or the highest rate permitted by law. This interest accrues starting from the date of the default.
This means that a prospective Hck Hot Chicken franchisee could face significant financial penalties for late payments. The 12% annual interest, while seemingly modest, can add up quickly, especially on larger overdue amounts. It is important to note that Hck Hot Chicken will only charge this rate if it is lower than the maximum rate allowed by applicable laws, suggesting that the franchisor intends to take full advantage of any legally permissible interest charges on delinquent accounts.
In addition to interest, Hck Hot Chicken also charges a flat $100 late fee per incident. Furthermore, Hck Hot Chicken can charge a service fee of up to 4% of the total amount for any payment made to them. These fees, combined with the potential interest charges, highlight the importance of franchisees maintaining timely payments to avoid these additional costs. Franchisees should ensure they have sufficient cash flow management in place to meet their financial obligations to Hck Hot Chicken.
It is fairly common in the franchise industry for franchisors to charge interest and late fees on overdue amounts to encourage timely payments and to compensate for the administrative costs and potential financial losses associated with collecting late payments. However, the specific rates and fees can vary significantly between franchise systems, so prospective franchisees should carefully review the FDD and franchise agreement to understand the full extent of these potential charges.