What is the 'Allocation Agreement' and when did Checkersrallys enter into it?

According to Checkersrallys's 2025 Franchise Disclosure Document, the Allocation Agreement is an intercompany agreement that Checkersrallys entered into with Holdings on October 12, 2018. Under the terms of this agreement, Checkersrallys jointly and severally unconditionally guarantees payment and performance of obligations under the 2017 Senior Credit Facility. This means Checkersrallys is legally bound to cover these obligations.

Specifically, Checkersrallys covenants and agrees to pay all obligations related to the 2017 Senior Credit Facility, including principal and interest. As a result, Checkersrallys records the debt obligation as a "related party credit facility" with an offsetting amount against "additional paid-in capital" on its consolidated balance sheets. The amounts owed by Checkersrallys to Holdings under the First Lien Term Loan and Second Lien Term Loan are termed the "Related Party Note," while amounts under the Revolver are called the "Related Party Revolver," and amounts under the Restatement Date Term Loan are referred to as "Related Party Restatement Date Term Loan".

For a prospective franchisee, this information provides insight into the financial structure and obligations of Checkersrallys. Understanding these financial arrangements can help franchisees assess the financial stability and potential risks associated with investing in a Checkersrallys franchise. It is important to note that these obligations could potentially impact the franchisor's ability to support its franchisees or invest in the brand's growth.