What recurring principal payments is Checkers required to make on the New Money Loans?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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's 2025 Franchise Disclosure Document, the company is obligated to make recurring quarterly principal payments on its New Money Loans. These payments are equivalent to 0.25% of the original principal amount, but this percentage may increase if Checkers takes on additional borrowings. The New Money Loans mature on June 16, 2027, at which point the remaining principal balance is due.
In addition to the principal payments, Checkers is also required to pay a contractual premium upon each principal repayment. The premium amount varies depending on when the repayment is made. Prior to the first anniversary of the loan, a make-whole provision is calculated as a discounted amount of the remaining interest payments before the anniversary. After the first anniversary but before the second, the premium is 7%. It decreases to 5% on or after the second anniversary but before the third, and finally to 3% on or after the third anniversary.
For a prospective Checkers franchisee, this debt structure indicates the financial obligations of the company. While the quarterly principal payments are a relatively small percentage of the original loan amount, the potential for increased payments with additional borrowings and the contractual premiums could impact Checkers's financial flexibility. Franchisees should consider how these obligations might affect the franchisor's ability to support the franchise system and invest in growth.