What happens to the principal amount of the New Money Loans upon maturity for Checkers?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
The New Money Loans mature on June 16, 2027. Additionally, the Company is required to make recurring quarterly principal payments on the New Money Loans in the amount equivalent to 0.25% of the original principal amount which may increase upon additional borrowings. 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) 7% on or after the first anniversary, but prior to the second anniversary, (iii) 5% on or after the second anniversary, but prior to the third anniversary, and (iv) 3% on or after the third anniversary.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the New Money Loans mature on June 16, 2027. The company is obligated to make recurring quarterly principal payments equivalent to 0.25% of the original principal amount, which may increase with additional borrowings. The remaining principal balance is due upon maturity.
In practical terms, this means that Checkers franchisees should be aware that while the company makes regular payments to reduce the principal amount of the New Money Loans, a significant portion of the original loan amount will still be outstanding when the loans reach their maturity date in June 2027. This remaining balance will need to be paid off at that time.
Additionally, Checkers is required to pay a contractual premium upon each principal repayment. The premium amount varies depending on when the repayment is made: it is a make-whole provision calculated as a discounted amount of remaining interest payments prior to the first anniversary, 7% on or after the first anniversary but before the second, 5% on or after the second anniversary but before the third, and 3% on or after the third anniversary. This premium adds to the cost of repaying the New Money Loans, especially for early repayments.