What are the conditions for renewal of Carls' Series 2018-1 Variable Funding Notes for two additional twelve-month terms?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
00 of Series 2018-1 4.959% Fixed Rate Senior Secured Notes, Class A-2-II, with an anticipated repayment date of June 2025; and (iii) $250,000 of Series 2018-1 5.710% Fixed Rate Senior Secured Notes, Class A-2-III, with an anticipated repayment date of June 2028. The Series 2018-1 Class A-2 Notes have a legal final maturity date of June 2048. The Series 2018-1 Class A-2 Notes require scheduled quarterly principal payments of $2,500 with the first principal payment due Decembe
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the Series 2018-1 Variable Funding Notes, which provide for senior secured revolving facility loans, have the possibility of being renewed for two additional twelve-month terms. The maturity date was extended to September 2027 on October 26, 2022.
The renewal of these notes is subject to certain conditions. One of the specific conditions mentioned in the document is maintaining a minimum debt service coverage ratio.
For a prospective Carls franchisee, this indicates that the company's ability to manage its debt and meet its financial obligations is a factor in extending the maturity date of these notes. It is important to note that the FDD does not specify what the minimum debt service coverage ratio is. A prospective franchisee should inquire about the specific requirements for this ratio to fully understand the conditions for renewal.