Are Checkers' debt obligations under the Credit Agreement collateralized by the company's assets?

According to Checkers' 2025 Franchise Disclosure Document, the company's debt obligations under the Credit Agreement are secured by substantially all of Checkers' assets. This means that if Checkers were to default on its debt obligations, the lenders have a legal claim to seize and sell the company's assets to recover the outstanding debt.

For a prospective franchisee, this information is relevant because it provides insight into the financial stability and risk profile of the franchisor. A heavily leveraged company with its assets pledged as collateral might be at a higher risk of financial distress, which could impact its ability to support its franchisees. It also states that Checkers was in compliance with the financial covenant at December 30, 2024, and January 1, 2024.

It is common for franchisors to have debt obligations, and it is also not unusual for these obligations to be collateralized by the company's assets. However, the extent of the collateralization and the company's compliance with financial covenants are important factors to consider when evaluating the financial health of a franchise system. Prospective franchisees should carefully review the franchisor's financial statements and consult with a financial advisor to assess the potential risks and rewards of investing in the franchise.