What recurring principal payments are 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. It is important to note that this percentage may increase if Checkers undertakes additional borrowings. The remaining principal balance of the New Money Loans is due upon the maturity date, which is June 16, 2027.
In addition to the principal payments, Checkers is also required to pay a contractual premium with each principal repayment. The premium amount varies depending on the timing of the repayment. 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 first anniversary. For repayments made on or after the first anniversary but before the second, the premium is 7%. It decreases to 5% for repayments on or after the second anniversary but before the third, and further to 3% for repayments made on or after the third anniversary.
For a prospective Checkers franchisee, this information is relevant because it provides insight into the financial obligations of the company. Understanding the terms of the New Money Loans, including the quarterly principal payments and associated premiums, can help franchisees assess the financial stability and overall health of the company. This knowledge can inform their decision-making process as they evaluate the risks and opportunities associated with investing in a Checkers franchise.