What is the late charge that Stretch Zone franchisees must pay 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. If any payment under this Agreement or any other agreement between us or our Affiliates and you for your Franchise Business is overdue for any reason, you must pay to us, on demand, in addition to the overdue amount, any insufficient funds (NSF) charges we incur and interest on the overdue amount from the date it was due until paid equal to the lesser of: (i) 18% per annum; or (i
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 Stretch Zone's 2025 Franchise Disclosure Document, if a franchisee's payment is overdue, they must pay a late charge of $100 for each overdue payment. This is in addition to any insufficient funds (NSF) charges Stretch Zone incurs and interest on the overdue amount. The interest will be calculated from the date the payment was due until it is paid, at a rate of either 18% per annum or the maximum rate permitted by law, whichever is less.
This late charge can add up quickly if payments are consistently late, so franchisees need to ensure timely payments to avoid these extra costs. It is important to note that Stretch Zone has the discretion to apply any payments to past due indebtedness, including royalty fees, training fees, technology fees, advertising contributions, purchases from Stretch Zone or its affiliates, interest, NSF charges, or any other debts the franchisee owes to Stretch Zone or its affiliates, regardless of any designation made by the franchisee.
Many franchise systems have similar late payment and interest charge policies. Franchisees should be aware of these terms and conditions to maintain a good financial standing with Stretch Zone and avoid penalties. The $100 late fee is a flat fee, which is relatively straightforward compared to interest calculations, but it's still an important cost to consider in managing the business's finances.