What secures the Senior Notes related to the Carvel franchise?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
The Co-Issuers' direct and indirect parents and their direct and indirect subsidiaries (collectively, the "Guarantors") are special-purpose, bankruptcy-remote, indirect wholly owned subsidiaries of the Company that hold substantially all the intellectual property and franchising-related assets. The Senior Notes are secured by substantially all the assets of the Guarantors. Each Guarantor is a separate entity and has separate creditors (from the Company and any of its non-Guarantor affiliates), and such Guarantor owns all its assets.
Other than the Guarantors, neither the Company nor any of its other direct or indirect subsidiaries guarantees or is in any way liable for the obligations under the Senior Notes. GTFL, has, however, agreed to cause the performance of certain obligations of the Guarantors in return for a management fee under the terms of a management agreement (the "Securitization Management Agreement").
GTFL manages and services the Co-Issuers' and the Guarantors' assets in its capacity as the manager under the Securitization Management Agreement. The primary responsibilities of the manager are to administer collections and otherwise service the managed assets on behalf of the Co-Issuers and the Guarantors, and to perform certain franchising, intellectual property, and operational and reporting services on behalf of the Co-Issuers and the Guarantors with respect to the managed assets.
Covenants and Restrictions
The Senior Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) debt service coverage ratios and senior leverage ratios, as defined in the Indenture, (ii) the maintenance of specified reserve accounts to be used to make required payments in respect of the Senior Notes, and (iii) provisions relating to optional and mandatory prepayments, including certain make-whole payments. The Senior Notes are also subject to customary rapid amortization events and customary events of default provided for in the Indenture. As of December 29, 2024, the Company was in compliance with all such covenants.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to the 2025 Carvel FDD, the Senior Notes are secured by substantially all the assets of the Guarantors. The Guarantors, which include the Co-Issuers' direct and indirect parents and their direct and indirect subsidiaries, are special-purpose, bankruptcy-remote, indirect wholly-owned subsidiaries of the Company. These Guarantors hold substantially all the intellectual property and franchising-related assets. Each Guarantor is a separate entity with separate creditors from the Company and its non-Guarantor affiliates, and each owns all its assets.
Other than the Guarantors, neither the Company nor any of its other direct or indirect subsidiaries guarantees or is liable for the obligations under the Senior Notes. GTFL, however, has agreed to cause the performance of certain obligations of the Guarantors in return for a management fee under the terms of a management agreement (the "Securitization Management Agreement").
GTFL manages and services the Co-Issuers' and the Guarantors' assets as the manager under the Securitization Management Agreement. The manager's primary responsibilities include administering collections and servicing the managed assets on behalf of the Co-Issuers and the Guarantors. They also perform certain franchising, intellectual property, and operational and reporting services for the Co-Issuers and the Guarantors with respect to the managed assets.
The Senior Notes are subject to a series of covenants and restrictions customary for transactions of this type, including debt service coverage ratios and senior leverage ratios, the maintenance of specified reserve accounts to be used to make required payments in respect of the Senior Notes, and provisions relating to optional and mandatory prepayments, including certain make-whole payments. The Senior Notes are also subject to customary rapid amortization events and customary events of default provided for in the Indenture. As of December 29, 2024, the Company was in compliance with all such covenants.