Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

We do not engage in speculative transactions, nor do we hold or issue financial instruments for trading purposes. In connection with the refinancings and recapitalizations of our business, we have issued fixed rate notes and entered into variable funding notes, and, at September 6, 2026, we are exposed to interest rate risk on borrowings under our 2025 Variable Funding Notes. As of September 6, 2026, we had no outstanding borrowings under our 2025 Variable Funding Notes.

Our 2025 Variable Funding Notes bear interest at fluctuating interest rates based on the Secured Overnight Financing Rate, plus a spread adjustment. Accordingly, a rising interest rate environment could result in higher interest expense due on borrowings under our 2025 Variable Funding Notes, in which event we may have difficulties making interest payments and funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected.

Our fixed-rate debt exposes us to changes in market interest rates reflected in the fair value of the debt and to the risk that the Company may need to refinance maturing debt with new debt at a higher rate. As of September 6, 2026, we had approximately $1.32 billion of debt classified as current associated with our 2018 9.25-Year Notes and the 2017 Ten-Year Notes for which the anticipated repayment date is July 2027. We expect to refinance the 2018 9.25-Year Notes and the 2017 Ten-Year Notes prior to the anticipated repayment date, and we expect, based on current benchmark rates, to refinance those notes at higher interest rates.

We are exposed to market risks from changes in food and commodity prices. During the normal course of business, we purchase cheese and certain other food products that are affected by changes in commodity prices and, as a result, we are subject to volatility in our food costs. Severe increases in commodity prices or food costs, including as a result of inflation, could affect the global and U.S. economies and could also adversely impact our business, financial condition or results of operations. We may periodically enter into financial instruments to manage this risk, although we have not done so historically. In instances when we use fixed pricing agreements with our suppliers, these agreements cover our physical commodity needs, are not net-settled and are accounted for as normal purchases.

Foreign Currency Exchange Risk

We have exposure to various foreign currency exchange rate fluctuations for revenues generated by our operations outside the U.S., which can adversely impact our net income and cash flows. Approximately 7.1% of our total revenues in the third quarter of 2026, approximately 7.0% of our total revenues in the three fiscal quarters of 2026 and approximately 6.8% of our total revenues in both the third quarter and three fiscal quarters of 2025 were derived from our international franchise segment, a majority of which were denominated in foreign currencies. We estimate that a hypothetical 10% adverse change in the foreign currency rates for our international markets would have resulted in a negative impact on international franchise royalty revenues of approximately $24.2 million in the three fiscal quarters of 2026. We also operate dough manufacturing and distribution facilities in Canada, which generate revenues denominated in Canadian dollars. We may periodically enter into financial instruments to manage foreign currency exchange risk, although we have not done so historically.