For a Stretch Zone franchise, what late charge will I incur for each overdue payment?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
a bank for the Franchise Business. You will make all Royalty Fees, Technology Fees and Media Fund contributions and other invoices due us and our Affiliates from remittances from your members that have been deposited into your operating account by ClubReady processing payments due us (the "Payment System"). You will cooperate with us to implement the Payment System within 15 days before the Opening Date. You agree to cooperate with us in maintaining the efficient operation of the Payment System including depositing all Gross Revenues you receive into your operating account within 1 Business Day of receipt. You cannot initiate payments through the ClubReady Electronic Payment System, but we are able to initiate payments through the ClubReady Electronic Payment System for invoices that are due us.
Section 3.4 INTEREST ON LATE PAYMENTS; LATE CHARGE
(a) **Interest
Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
According to the 2025 Stretch Zone FDD, if a franchisee's payment is overdue, they must pay a late charge of $100 for each instance. This is in addition to any insufficient funds (NSF) charges Stretch Zone incurs and interest on the overdue amount. The interest charged will be the lesser of 18% per annum or the maximum rate of interest permitted by law.
This late charge can add up quickly if payments are consistently late, so franchisees must prioritize timely payments to avoid these extra costs. It's also important to note that Stretch Zone has the discretion to apply any payments to past due indebtedness in any manner they choose, regardless of any designation by the franchisee. This means that even if a franchisee intends a payment to cover a specific fee, Stretch Zone can apply it to older outstanding debts first.
In addition to the late charge, Stretch Zone may also assess a service charge for returned checks due to insufficient funds. This charge is $50 or 5% of the check's face value, whichever is greater, but limited to the highest amount permitted by law. Franchisees should ensure sufficient funds are available to cover all payments to avoid these additional charges.