Hot and cold submarine sandwich restaurant Jersey Mike's is preparing to sell $760 million in whole business asset-backed securities (ABS), supported by revenue from existing and future domestic franchise agreements.
Jersey Mike's Funding, 2026-1, will issue notes through classes A-2-I and A-2-II, using the platform's master trust structure, according to Kroll Bond Rating Agency. The A-2-I and A-2-II notes have anticipated repayment dates of February 2031 and February 2034, respectively, according to Kroll Bond Rating Agency.
Both classes of notes have a February 2056 final maturity date and garner a BBB credit rating from KBRA.
Outside of net franchise royalties, cash flows are composed of brand dollar program payments (36.7%), plus a series of fees.
Net franchise royalties support Jersey Mike's Funding 2026-1's cash flows, which accounts for 52.9% of securitized revenues. Outside of that, cash flows are composed of brand dollar program payments (36.7%), plus a series of other fees, KBRA said.
Guggenheim Securities is the sole structuring advisor and lead left bookrunner, KBRA said.
The deal structure includes several provisions to preserve cash flow to the notes. For one, there is a reserve account for the senior notes, which will cover at least three months of class A note interest payments.
Also, the class A2 notes will have scheduled amortization of 1% per year before the anticipated repayment date (ARD). That could change, however, if the senior ABS leverage ratio is less than or equal to 5.00x, outside of the onset and ongoing of any rapid amortization event.
Jersey Mike's Funding 2026-1 includes a cash trapping debt service coverage ratio. If the principal and interest debt service coverage ratio (DSCR) is between 1.50x and 1.75x, then half of all excess cash flows will be deposited into the cash trap reserve account.
As of September 30, 2025, revenue related to 3,160 restaurants were included in the collateral for the deal. Although the company has restaurant locations in all 50 states, Washington, D.C. and Canada, only those located in the U.S. will be included in the deal.
