What was the principal composition of the capital contributions received by the CKE Securitization Entities related to Carls during fiscal year 2023?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
| 2023 | 2022 | |
|---|---|---|
| Financing method sale-leaseback liability, long-term portion | $ 219,707 | $ 234,259 |
| Deferred franchise and development fees | 32,730 | 34,738 |
| Unfavorable lease agreements (1) | 6,320 | 42,793 |
| Estimated liability for deferred rent, long-term portion (2) | _ | 14,126 |
| Other | 3,753 | 910 |
| Total other long-term liabilities | $ 262,510 | $ 326,826 |
- (1) The decrease in unfavorable leases agreements reflects the reclassification of unfavorable leases liabilities where we are the lessee in the underlying operating lease to the operating lease assets recorded for the underlying lease in connection with our transition to ASC 842. See Note 9, Leases.
- (2) The d
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 received capital contributions of $45,394 during fiscal year 2023. These contributions primarily consisted of property, equipment, and assets associated with the CKE Restaurants Acquisition. This information is detailed in Note 12 of the financial statements.
For a prospective Carls franchisee, this indicates the types of assets being invested into the securitization entities that support the franchise system. The fact that the contributions are largely in the form of property and equipment suggests ongoing investment in the physical infrastructure and resources that support Carls restaurants.
It's important to note that these contributions are related to the CKE Securitization Entities, which hold the assets of CKE Restaurants and its subsidiaries, rather than direct investments into individual franchise locations. The CKE Restaurants Acquisition also plays a role in these contributions, indicating that the acquisition of existing restaurants or related assets is a source of capital for the securitization entities.
Understanding the nature and source of these capital contributions can provide insight into the financial structure and investment strategies of the overall Carls franchise system. Franchisees may want to further investigate the specific types of property and equipment involved and how these investments benefit their individual operations.