What contractual premium is Checkers required to pay upon each principal repayment on or after the second anniversary, but prior to the third anniversary?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Additionally, the Company is required to make recurring quarterly principal payments on the Second Out Loans in the amount equivalent to 0.25% of the original principal amount. The remainder of the principal amount is due upon maturity. Upon each principal repayment, the Company is required to pay a contractual premium, equal to (i) prior to the first anniversary, a make-whole provision calculated as a discounted amount of remaining interest payments prior to the first anniversary (ii) 8% on or after the first anniversary, but prior to the second anniversary, (iii) 7% on or after the second anniversary, but prior to the third anniversary, and (iv) 5% on or after the third anniversary, and (v) 3% on or after the fourth anniversary.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the company is obligated to pay a contractual premium of 7% upon each principal repayment on the Second Out Loans, specifically for payments made on or after the second anniversary but before the third anniversary of the loan.
This premium is part of the terms associated with the Second Out Loans, which were issued under a New Credit Agreement as part of an Out-of-Court Restructuring. The loan structure includes recurring quarterly principal payments equivalent to 0.25% of the original principal amount, with the remaining balance due upon maturity. In addition to these payments, Checkers must pay a premium that varies depending on when the principal repayment is made.
For a prospective Checkers franchisee, this detail is relevant only insofar as it reflects the overall financial health and obligations of the parent company. While franchisees are not directly responsible for these loan repayments, the financial stability of the franchisor can impact the support and resources available to franchisees. Understanding the franchisor's debt obligations and repayment terms can provide insight into their financial management and long-term viability.