What are the two options Checkersrallys has for calculating the interest rate on Out Loans?

According to Checkersrallys's 2025 Franchise Disclosure Document, the company has two options for calculating the interest rate on its Second Out Loans. The interest rate is a floating rate, and Checkersrallys can choose between (x) an alternative base rate plus 8.00% per annum or (y) the Adjusted Term Secured Overnight Financing Rate plus 9.00% per annum plus a credit adjustment spread.

Checkersrallys also has the option to pay interest on the Second Out Loans that has accrued at a rate equal to 6.00% per annum in kind, rather than in cash. The Second Out Loans mature on June 16, 2028. This means that the company can choose to add the interest to the principal balance of the loan instead of paying it out in cash, which could help with cash flow in the short term but would increase the total amount owed over the life of the loan.

These loans were part of an Out-of-Court Restructuring where First Lien Lenders exchanged their loans for equity in Topco and Last-Out Term Loans. The specifics of these interest rate options and repayment terms are important for prospective franchisees to understand, as they reflect the financial structure and obligations of Checkersrallys. Franchisees should consider how the company's financial health and debt obligations might impact their own operations and the overall stability of the franchise system.