What was the amount of revenue reported as 'Eliminations' in the financial statement for Carls?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
28 | | Operating leases, less current portion | 269,290 | — | — | 80,987 | — | — | — | 350,277 | | Other long-term liabilities | 68,431 | (1) | — | 194,080 | — | — | — | 262,510 | | Total liabilities | 416,763 | 622,561 | — | 326,751 | 592,747 | — | (79,292) | 1,879,530 | | Members' equity (deficit): | | | | | | | | | | Members' equity (deficit) | 402,040 | (584,635) | — | 525,624 | (591,535) | — | — | (248,506) | | Total liabilities and members' deficit $ | 818,803 $ | 37,926 $ | — $ | 852,375 $ | 1,212 $ | — $ | (79,292) $ | 1,631,024 |
THE CKE SECURITIZATION ENTITIES COMBINING CONSOLIDATING STATEMENT OF OPERATIONS (In thousands)
Fiscal 2024
| Carl's Jr. Restaurants LLC | Carl's Jr. Funding LLC | Carl's Jr. SPV Guarantor LLC | Hardee's Restaurants LLC | Hardee's Funding LLC | Hardee's SPV Guarantor LLC | Eliminations | The CKE Securitization Entities | |||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue: | ||||||||||
| Company-operated restaurants | $ 112,928 $ | — $ | — $ | 255,914 $ | — $ | — $ | — $ | 368,842 | ||
| Franchised restaurants and other | 175,402 | 5,643 | — | 117,311 | 12,594 | — | (18,237) | 292,713 | ||
| Total revenue | 288,330 | 5,643 | — | 373,225 | 12,594 | — | (18,237) | 661,555 | ||
| Operating costs and expenses: | ||||||||||
| Company-operated restaurants: | ||||||||||
| Food and packaging | 28,645 | — | — | 69,234 | — | — | — | 97,879 | ||
| Payroll and other employee benefits | 34,371 | — | — | 88,269 | — | — | — | 122,640 | ||
| Occupancy and other | 36,600 | — | — | 86,253 | — | — | (18,237) | 104,616 | ||
| Total company-operated restaurants | 99,616 | — | — | 243,756 | — | — | (18,237) | 325,135 | ||
| Franchised restaurants and other | 68,884 | — | — | 24,742 | — | — | — | 93,626 | ||
| Advertising | 6,889 | — | — | 13,837 | — | — | — | 20,726 | ||
| General and administrative | (2,038) | 24,442 | — | 213 | 25,336 | — | — | 47,953 | ||
| Facility action charges, net | (1,128) | — | — | 3,311 | — | — | — | 2,183 | ||
| Total operating costs and expenses | 172,223 | 24,442 | — | 285,859 | 25,336 | — | (18,237) | 489,623 | ||
| Operating income (loss) |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the revenue reported as 'Eliminations' was an expense of $18,237. This figure is part of the consolidated financial data presented for Carl's Jr. Restaurants LLC, Carl's Jr. Funding LLC, Carl's Jr. SPV Guarantor LLC, Hardee's Restaurants LLC, Hardee's Funding LLC, Hardee's SPV Guarantor LLC, Eliminations, and The CKE Securitization Entities. The 'Eliminations' category is used in consolidated financial statements to avoid double-counting revenue and expenses from transactions between related entities.
In the context of franchising, eliminations typically arise when the parent company (Carls) and its subsidiaries engage in intercompany transactions. For example, if one Carls entity provides services to another, the revenue recorded by the service-providing entity and the expense recorded by the receiving entity are eliminated upon consolidation to present a true picture of the overall financial performance of the combined entity to outside parties.
For a prospective Carls franchisee, this specific 'Eliminations' figure may not directly impact their day-to-day operations. However, understanding how Carls manages its consolidated financials can provide insight into the company's overall financial structure and inter-company relationships. It's important for franchisees to focus on the revenue and expenses directly related to their franchised restaurant, while also appreciating the broader financial context of the entire Carls organization.
It is important to note that the eliminations are a component of the overall financial health of Carls. Franchisees should consider the entire financial statement, not just one line item, when evaluating the financial stability of the franchise system.