On what date did Checkers enter into an intercompany allocation agreement with Holdings?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company entered into an intercompany allocation agreement (the "Allocation Agreement") with Holdings on October 12, 2018. Under the terms of the Allocation Agreement, the Company jointly and severally unconditionally guarantees payment and performance of obligations under the 2017 Senior Credit Facility and covenants and agrees to pay as due all obligations, whether for principal, interest or otherwise, with respect to the 2017 Senior Credit Facility. Accordingly, the Company has recorded the
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the company entered into an intercompany allocation agreement with Holdings on October 12, 2018. This agreement, referred to as the "Allocation Agreement," stipulates that Checkers jointly and severally unconditionally guarantees the payment and performance of obligations related to the 2017 Senior Credit Facility.
Under the terms of this agreement, Checkers is obligated to cover all obligations, including principal and interest, associated with the 2017 Senior Credit Facility. The FDD indicates that Checkers has recorded this debt obligation as a "related party credit facility," with an offsetting amount against "additional paid-in capital" in the consolidated balance sheets.
For a prospective franchisee, this agreement highlights the interconnected financial relationship between Checkers and its parent company, Holdings. It also demonstrates that Checkers has financial obligations as a guarantor for Holdings' credit facility. Understanding the implications of this agreement is crucial for franchisees as it reflects the financial structure and potential liabilities of the Checkers organization.