Under what condition can a Jersey Mikes Maker make a prepayment without penalty?
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 Maker has the right to prepay the unpaid principal amount, either in whole or in part, before the maturity date without incurring a penalty. However, this is conditional. To avoid a penalty, the Maker must provide written notice to the Holder (Jersey Mike's Franchise Systems, LLC) of their intention to prepay.
Furthermore, the prepayment of principal must be accompanied by the payment of interest accrued up to the date of prepayment. The Maker is also responsible for covering all costs, expenses, or charges owed to the Holder as of the prepayment date. This means that while there is no direct penalty for prepaying the principal, the Maker is still obligated to settle any outstanding interest and other financial obligations at the time of prepayment.
Jersey Mike's will then apply the prepayment to reduce the outstanding principal amount owed under the note. This arrangement benefits the Maker by allowing them to reduce their debt obligations early, provided they meet the conditions of paying accrued interest and any other outstanding charges. This is a fairly standard clause in loan agreements, ensuring that the lender is compensated for the time value of money and any expenses incurred.