What conditions are required for the renewal of the Series 2018-1 Variable Funding Notes for Carls?
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 p
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, were amended on October 26, 2022, to extend the maturity date to September 2027. This amendment includes options for renewal for two additional twelve-month terms.
The renewal of these notes is subject to certain conditions, including maintaining a minimum debt service coverage ratio. This means that Carls must meet a specific financial benchmark related to its ability to cover its debt obligations to qualify for the renewal.
For a prospective franchisee, this indicates that Carls's financial obligations are structured with specific renewal terms that depend on the company's financial performance. It is important to note that the specific requirements for the minimum debt service coverage ratio are not detailed in this document, and further clarification may be needed to fully understand the implications of this condition.