What is the maturity date of the unsecured note that Carls assumed in connection with the acquisition of Hardee's restaurants from a franchisee?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
ain covenants or restrictions are not satisfied or complied with, the Senior Notes are subject to accelerated repayment events and events of default. Although management does not anticipate an event of default, if any such event occurred and was not cured within any applicable cure period, the unpaid amounts outstanding could become immediately due and payable.
In connection with the issuance of the Series 2021-1 Class A-2-I Notes in fiscal year 2022, we incurred debt issuance costs of $4,275, which w
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, in connection with the acquisition of Hardee's restaurants from a franchisee, Carls assumed a $2,100 unsecured note. Carls made a payment of $200 on November 20, 2020. The note's maturity date was July 2023, at which time the entire unpaid principal balance became due. The note bears interest at a variable interest rate equal to prime plus 0.25%. Accrued interest is payable quarterly commencing October 2020 and continuing thereafter on the 27th day of each quarter (January, April, July, and October) until maturity.
This information is relevant to prospective franchisees as it provides insight into Carls's financial obligations and how they manage debt acquired through business acquisitions. Understanding the terms of such notes, including the interest rates and payment schedules, can help franchisees assess the financial stability and management practices of Carls.
The fact that the note has a variable interest rate (prime plus 0.25%) means that Carls's interest expenses could fluctuate based on changes in the prime rate. This could impact Carls's profitability and, indirectly, the resources available to support franchisees. The quarterly interest payments also represent a regular cash outflow for Carls.
While the note was paid down in full in July 2023, the details surrounding it offer a glimpse into the types of financial arrangements Carls enters into. Prospective franchisees may want to inquire about any similar outstanding obligations or potential future acquisitions that could impact the company's financial health.