What were the management fee expenses incurred by the CKE Securitization Entities related to Carls during fiscal year 2023?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
ire operating lease liability is recorded in the Combined Consolidated Balance Sheet.
| Fig | scal 2022 |
|---|---|
| $ | 2,898 2,147 |
| - | (2,826) |
| $ | 2,219 Fi: |
NOTE 17 — EMPLOYEE RETIREMENT PLAN
We and CKE Restaurants sponsor a contributory plan ("401(k) Plan") to provide retirement benefits under the provisions of Section 401(k) of the Internal Revenue Code ("IRC"). Participants may elect to contribute a portion of their annual salaries on a pre-tax basis to the 401(k) Plan, subject to the maximum contribution allowed by the IRC. During fiscal 2023 and 2022, our matching contributions to the 401(k) Plan were $94 and $88, respectively.
NOTE 18 — RELATED PARTY TRANSACTIONS
Transactions with CKE Restaurants and its Subsidiaries
The CKE Securitization Entities have a management agreement with CKE Restaurants (the "Management Agreement"), pursuant to which CKE Restaurants, as Manager, is required to manage and service the assets of the CKE Securitization Entities in accordance with the terms set forth in the Management Agreement. The primary responsibilities of Manager are to administer collections on behalf of the CKE Securitization Entities, and to perform certain activities pertaining t
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the CKE Securitization Entities incurred management fee expenses of $49,271 during fiscal year 2023. These fees are paid to CKE Restaurants, which manages and services the assets of the CKE Securitization Entities under a management agreement. These expenses are included within the general and administrative expenses.
The management fee is calculated using a formula that includes a base fee of $15,000 per year, along with a variable fee. The variable fee is based on retained collections from the last four quarterly collection periods and is subject to adjustments, including annual increases to account for inflation.
For a prospective Carls franchisee, this indicates that a portion of the revenue generated by the franchise system is allocated to cover these management expenses. Understanding the specifics of this management agreement and how the fees are calculated can be crucial for assessing the overall financial health and stability of the Carls franchise system. It's also important to note that these fees are part of the general and administrative expenses, which franchisees should consider when evaluating the overall cost structure of the franchise.