What are the interest rate bases for the Variable Funding Notes for Jack In The Box?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
Variable Funding Notes — Depending on the type of borrowing under the Variable Funding Notes, interest on the Variable Funding Notes will be based on (i) the prime rate, (ii) overnight federal funds rates, (iii) the London interbank offered rate for U.S. Dollars or (iv) the lenders' commercial paper funding rate plus any applicable margin, as set forth in the Variable Funding Note Purchase Agreement. There is a scaled commitment fee on the unused portion of the Variable Funding Notes facility of between 50 and 100 basis points. The principal and interest on the Variable Funding Notes were repaid in full in October 2024. Following the anticipated repayment date (and any extensions thereof), additional interest will accrue equal to 5.00% per annum.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 93–94)
What This Means (2025 FDD)
According to Jack In The Box's 2025 Franchise Disclosure Document, the interest rates for the Variable Funding Notes are based on several options. These include the prime rate, overnight federal funds rates, the London interbank offered rate for U.S. Dollars, or the lenders' commercial paper funding rate plus any applicable margin. The specific rate used depends on the type of borrowing under the Variable Funding Notes, as detailed in the Variable Funding Note Purchase Agreement.
Additionally, Jack In The Box has a scaled commitment fee on the unused portion of the Variable Funding Notes facility, ranging between 50 and 100 basis points. The principal and interest on these notes were fully repaid in October 2024. However, following the anticipated repayment date, additional interest will accrue at a rate of 5.00% per annum.
For a prospective franchisee, understanding these interest rate terms is crucial, although the Variable Funding Notes were repaid in full in October 2024. It is important to note that Jack In The Box may enter into similar financing arrangements in the future. Therefore, it is important to review the Variable Funding Note Purchase Agreement to fully understand the interest rate implications and commitment fees, as these factors can significantly impact the overall cost of borrowing and the financial obligations of Jack In The Box.