What interest rate does Mrcool use for its unsecured loans to related parties?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
Related parties are entities which share common ownership with the Company. The Company has unsecured loans, due on demand, that bear interest at the Applicable Federal Rate (AFR) to the following related parties at December 31,
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, the company provides unsecured loans to related parties that are due on demand. These loans bear interest at the Applicable Federal Rate (AFR). This means the interest rate is not fixed but fluctuates based on the federal rate in effect at the time.
For a prospective franchisee, this related-party lending practice indicates that Mrcool engages in financial transactions with entities sharing common ownership. While the specific AFR is not disclosed, it is tied to a benchmark rate set by the federal government.
It's important to note that the FDD does not specify the exact AFR being used or the terms of repayment beyond being 'due on demand.' A potential franchisee should seek clarification from Mrcool regarding the specific AFR used, the amounts of such loans, and the repayment history to assess any potential risks or benefits associated with these related-party transactions.