When does the note payable to Famous Recipe Group, LLC mature for Lees Famous Recipe?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
-------------------------|------------------| | 2026 | 1,550,177 | | 2027 | 1,551,960 | | 2028 | 1,562,418 | | 2029 | 1,556,381 | | Thereafter | 53,346,142 | | Total undiscounted cash flows | 61,221,858 | | Less: present value discount | (47,289,255) | | Total lease liabilities | $ 13,932,603 |
NOTE 7 - NOTES PAYABLE
Notes payable are summarized as follows:
| 2024 | 2023 | |
|---|---|---|
| Note payable to financing company under a $30,000,000 | $ 30,000,000 | $ 21,000,000 |
| credit agreement, intere |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 69)
What This Means (2025 FDD)
According to Lees Famous Recipe's 2025 Franchise Disclosure Document, the note payable to Famous Recipe Group, LLC matures in June 2028. The note involves annual principal payments of $700,000 starting in June 2024, with interest at 5%. This note is unsecured.
For a prospective franchisee, this indicates that Lees Famous Recipe has a financial obligation to its parent company, Famous Recipe Group, LLC. The repayment schedule and interest rate are fixed, which provides some predictability. However, the fact that the note is unsecured could be a point of concern, as it implies that Famous Recipe Group, LLC does not have a specific claim on Lees Famous Recipe's assets in case of default.
It is important for potential franchisees to understand the implications of this related-party transaction. While such arrangements are not uncommon, they can sometimes create conflicts of interest or affect the financial stability of the franchise. Franchisees should consider how these payments might impact Lees Famous Recipe's ability to support its franchisees and invest in the brand's growth. Consulting with a financial advisor to assess the overall financial health of Lees Famous Recipe is advisable.