Does a Jersey Mikes franchisee have the right to make prepayments on the unpaid principal before the maturity date?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
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- MAKER'S PAYMENTS BEFORE THEY ARE DUE. Maker has the right to make payment of the unpaid Principal in whole or in part at any time before the Maturity Date ("Prepayment"). If Maker makes Prepayment, Maker shall notify the Holder in writing that Maker is doing so. Maker may make Prepayment without paying any penalty; provided, however, that any such prepayment of principal shall be accompanied by the payment of interest accrued to the date of such prepayment and all costs, expenses or charges then owed to Holder pursuant to this Note. The Holder shall use Prepayment to reduce the amount of principal that is owed under this Note.
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2025 FDD)
According to Jersey Mike's 2025 Franchise Disclosure Document, a franchisee, referred to as the 'Maker,' has the right to prepay the unpaid principal, either in whole or in part, before the maturity date. This is termed a 'Prepayment.'
To exercise this right, the Jersey Mikes franchisee must provide written notification to the 'Holder' of their intention to make a prepayment. Importantly, Jersey Mikes does not impose any penalty for prepayments. However, the franchisee is obligated to include payment for the interest accrued up to the date of prepayment, along with any other outstanding costs, expenses, or charges owed to the Holder as per the terms of the note.
The Holder, upon receiving a prepayment, is required to apply the prepayment to reduce the outstanding principal amount owed under the note. This arrangement benefits the franchisee by allowing them to reduce their debt obligations early without incurring penalties, provided they also settle any accrued interest and outstanding charges.