Under what circumstances does Monicals Pizza charge interest on past due balances?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
eeding. Any amounts due from Franchisee to Franchisor shall accrue interest at a rate equal to eighteen percent (18%) per annum, or the maximum rate allowed by applicable law, from the date such payment is due until it is paid in full.
22.5 Unlimited Guaranty and Assumption of Obligations
Simultaneously with the execution of this Agreement, all holders of a legal or beneficial interest in Franchisee of five percent (5%) or greater shall be required to execute and deliver to Franchisor the Unlimited Guaranty and Assumption of Obligations attached as Exhibit 3, through which such holders agree to assume and discharge all of Franchisee's obligations under this Agreement and to be personally liable hereunder
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, any amounts due to Monicals Pizza from a franchisee or developer will accrue interest if not paid on time. Specifically, the FDD states that interest will be charged at a rate of eighteen percent (18%) per annum, or the maximum rate allowed by applicable law, calculated from the date the payment was originally due until it is paid in full.
This policy applies both to franchisees under the Franchise Agreement and to developers under the Development Agreement. The interest applies to any sums not paid to Monicals Pizza or its affiliates when due. This includes not only franchise fees and royalties but also any other financial obligations outlined in the agreements.
For a prospective Monicals Pizza franchisee, this means it is crucial to manage finances carefully and ensure all payments are made on time to avoid incurring significant interest charges. The high interest rate of 18% per annum could substantially increase the amount owed if payments are delayed. Franchisees should also be aware of the maximum interest rate allowed by law in their jurisdiction, as this could potentially override the 18% rate if it is higher.
Furthermore, the FDD clarifies that this interest accrual is separate from any costs Monicals Pizza might incur in enforcing the agreements. If Monicals Pizza has to take legal action to recover overdue amounts, the franchisee or developer will also be responsible for covering Monicals Pizza's legal and accounting fees, in addition to the accrued interest on the unpaid sums.