How is the interest rate determined for rent defaults for a Jack In The Box franchise?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Cure Under Lease by Us | All costs we incur | Upon Demand | If you fail to perform any obligation under the lease, we may cure the default and you must pay all costs we incur along with interest. |
| Rent Default - Interest | Highest rate of interest permitted by law in the state in which the Premises are located, and if there is no maximum rate permitted by law, then at a per annum rate which is the higher of (a) 20% or (b) the prime commercial interest rate by Bank of America, N.T.& S.A., plus 2% | Upon Demand | Due if you fail to pay rent by the due date |
Source: Item 6 — OTHER FEES (FDD pages 27–35)
What This Means (2025 FDD)
According to Jack In The Box's 2025 Franchise Disclosure Document, if a franchisee fails to pay rent by the due date, they will be charged interest on the rent owed. The interest rate is determined by the highest rate of interest permitted by law in the state where the premises are located.
However, if there is no maximum interest rate permitted by law in that state, the interest rate will be the higher of either (a) 20% per annum or (b) the prime commercial interest rate by Bank of America, N.T.& S.A., plus 2% per annum.
This means that a Jack In The Box franchisee could face a significant financial penalty for late rent payments, especially if the state does not have a legal maximum interest rate. Franchisees should be aware of these terms and ensure timely rent payments to avoid incurring these charges.