What is the interest rate charged per month on unpaid amounts owed by a Kidokinetics franchisee?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 5.6.2. Interest. Any and all amounts that are unpaid at the time they are due and owing from Franchisee to Franchisor under the terms of this Agreement will bear interest from the date due until paid at the rate of 1.5% per month or at the highest rate permitted by law, whichever is lower.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, any amounts that a franchisee owes to Kidokinetics that remain unpaid will accrue interest. The interest rate applied to these overdue amounts is 1.5% per month. However, if the highest interest rate permitted by law is lower than 1.5% per month, then the lower legal rate will be used instead. This interest will be calculated from the original due date until the payment is fully settled.
This means that if a Kidokinetics franchisee fails to pay royalties, brand development fund contributions, technology fees, or any other amounts owed to Kidokinetics on time, they will be charged interest on the outstanding balance. The 1.5% monthly interest rate can quickly increase the total amount owed, so it is crucial for franchisees to manage their finances carefully and ensure timely payments. Franchisees should be aware of the specific due dates for all payments and plan accordingly to avoid incurring these interest charges.
Franchisors commonly charge interest on overdue payments to encourage timely payment and to compensate them for the administrative costs and potential financial losses associated with collecting late payments. The specific interest rate can vary among franchise systems, but it is typically set at a level that is high enough to deter late payments while remaining compliant with applicable laws. Prospective Kidokinetics franchisees should factor this potential cost into their financial projections and ensure they have sufficient cash flow to meet their obligations to Kidokinetics on time.