What were the quarterly fee obligations for Checkersrallys on the unused portion of the Revolver facility?

According to Checkersrallys's 2025 Franchise Disclosure Document, the company had obligations to pay fees on the unused portion of its Revolver facility. These fees were calculated quarterly. The annual rate was 0.50% applied to the average daily amount of unused revolving credit commitments. Checkersrallys was also obligated to pay a letter of credit participation fee. This fee was based on the aggregate stated amount of each letter of credit available to be drawn. The fee was equal to the applicable margin for LIBOR rate loans.

For a prospective Checkersrallys franchisee, this information is relevant in understanding the financial obligations and debt structure of the company. While the franchisee is not directly responsible for these fees, the financial health of the franchisor can impact the support and services they provide. A heavily leveraged franchisor might be more prone to financial difficulties, which could affect its ability to invest in marketing, training, or technology improvements that benefit franchisees.

The mention of LIBOR (London Interbank Offered Rate) is also noteworthy. LIBOR was a benchmark interest rate that has been phased out, with alternative rates now being used. The FDD mentions that the letter of credit participation fee was equal to the applicable margin for LIBOR rate loans. A prospective franchisee may want to inquire whether Checkersrallys has transitioned to an alternative rate and how that might affect any similar financial obligations in the future.

Understanding the franchisor's debt obligations and how they manage their finances is a crucial part of due diligence for any potential franchisee. While this section of the FDD focuses on the franchisor's financial statements, it indirectly provides insights into the overall stability and risk associated with investing in a Checkersrallys franchise.