Under what condition does Monicals Pizza charge interest to franchisees?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisor or Franchisee is required to enforce this Agreement in a judicial or arbitration proceeding, the prevailing party shall be entitled to reimbursement of its costs, including reasonable accounting and attorneys' fees, in connection with such proceeding. 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.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, if a franchisee owes money to Monicals Pizza and fails to pay on time, interest will accrue on the outstanding balance. Specifically, any amounts due from the franchisee to Monicals Pizza will accrue interest from the date the payment was originally due until it is paid in full.
The interest rate applied to these overdue amounts is set at eighteen percent (18%) per annum. However, the agreement specifies that if applicable law sets a maximum interest rate lower than 18%, the maximum rate allowed by law will be used instead. This ensures that Monicals Pizza remains compliant with any relevant legal restrictions on interest rates.
This condition is fairly standard in franchise agreements. It incentivizes franchisees to make timely payments and compensates the franchisor for the time value of money and any administrative costs associated with collecting overdue payments. Prospective Monicals Pizza franchisees should be aware of this clause and ensure they have sufficient financial planning to avoid late payments and the resulting interest charges.