What is the range of interest rates that Exit charges on notes receivable from sub-franchisors?

According to Exit's 2025 Franchise Disclosure Document, notes receivable represent balances due on the sale of Canadian and U.S. regions from sub-franchisors. These notes bear interest at rates between 3.00% and 10.00%. The notes mature between 2024 and 2033 and are secured by performance contracts in the franchisor agreements. This indicates that Exit provides financing to sub-franchisors for the purchase of regional development rights.

For a prospective sub-franchisor, this means that a portion of the purchase price for the rights to a region can be financed through Exit. The interest rate will be determined at the time of the agreement, falling within the stated range. The repayment schedule will be structured with maturity dates ranging from 2024 to 2033, offering a potentially extended repayment period. The notes are secured by performance contracts, meaning that the sub-franchisor's adherence to the franchise agreement terms serves as collateral.

It's important to note that the availability of financing, the specific interest rate, and the maturity date will likely depend on the sub-franchisor's creditworthiness and the specific terms negotiated with Exit. The fact that the notes are secured by performance contracts underscores the importance of fulfilling the obligations outlined in the franchise agreement. Failure to meet performance targets could jeopardize the sub-franchisor's rights and potentially lead to the loss of the secured regional rights.

Prospective sub-franchisors should carefully evaluate the terms of the financing, including the interest rate, repayment schedule, and any associated fees. They should also assess their ability to meet the performance targets outlined in the franchise agreement to avoid any potential issues with the notes receivable. Understanding these financial obligations is crucial for the success of the sub-franchise venture.