What was the total elimination amount reported in the financial statements for the Carls brand?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
(see Note 9) | | 46,212 | | | | Contributed property and equipment, excluding the CKE Restaurants Acquisitions | | 45,394 | | 21 ,657 | | Contributed assets for the CKE Restaurants Acquisitions (see Note 5) | | | | 2,136 |
Contributed property and equipment and contributed assets for the CKE Restaurants Acquisitions represent assets purchased by CKE Restaurants and certain of its wholly owned subsidiaries on behalf of the CKE Securitization Entities pursuant to the Management Agreement. For accounting purposes, these purchases are treated as non-cash contributions to the CKE Securitization Entities.
THE CKE SECURITIZATION ENTITIES COMBINING CONSOLIDATING BALANCE SHEET (In thousands)
January 31, 2023
| ACCETE | Carl's Jr. | F | Carl's Jr. | Carl's Jr. SPV | R | Hardee's estaurants LLC | F | Hardee's | rdee's SPV | Eliminations | Se | The CKE curitization Entities | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| taurants LLC | unding LLC | Guarantor LLC | Funding LLC | trantor LLC | ||||||||||||
| ASSETS Current assets: | ||||||||||||||||
| Cash and cash equivalents | S | 1,627 | S | 1.161 | S | _ | $ | 3,555 | S | 977 | S | _ | $ | S | 7,320 | |
| Cash and cash equivalents - restricted | _ | 16,053 | _ | _ | _ | - | _ | 16,053 | ||||||||
| Accounts receivable, net | 10,663 | _ | 10,036 | _ | 20,699 | |||||||||||
| Due from affiliates | 6,860 | 20,696 | - | 52,060 | 215 | _ | (79,292) | 539 | ||||||||
| Inventories | 562 | _ | _ | 2,411 | - | 2,973 | ||||||||||
| Prepaid expenses | _ | 16 | - | 137 | 20 | - | 173 | |||||||||
| Other current assets | 83 | _ | 83 | |||||||||||||
| Total current assets | 19,795 | 37,926 | 68,199 | 1,212 | _ | (79,292) | 47,840 | |||||||||
| Property and equipment, net | 83,427 | 266,461 | 349,888 | |||||||||||||
| Operating lease assets | ******* | 317,666 | - | 93,790 | - | - | - | 411,456 | ||||||||
| Intangible assets, net | ****** | 384,915 | _ | 408,115 | _ | _ | 793,030 | |||||||||
| Other assets, net | 13,000 | - | 15,810 | _ | 28,810 | |||||||||||
| Total assets. | S | 818,803 | $ | 37,926 | S | $ | 852,375 | $ | 1,212 | $ | $ | (79,292) | S | 1,631,024 | ||
| LIABILITIES AND MEMBERS' DEFICIT | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Current portion of long-term debt | s | _ | 8 | 5,900 | 5 | - | $ | - | 5 | 5,900 | $ | 1 | 8 | - | 5 | 11,800 |
| Current portion of finance leases | 627 | _ | _ | 641 | _ | _ | _ | 1,268 | ||||||||
| Current portion of operating leases | 59,930 | _ | 16,312 | _ | _ | 76,242 | ||||||||||
| Accounts payable | 2,849 | _ | _ | 3,358 | _ | _ | 6,207 | |||||||||
| Due to affiliates | (564) | 55,477 | _ | 3,779 | 25,677 | _ | (79,292) | 5,077 | ||||||||
| Other current liabilities | 10,931 | 2,982 | _ | 18,435 | 2,968 | - | 35,316 | |||||||||
| Total current liabilities | 73,773 | 64,359 | _ | 42,525 | 34,545 | _ | (79,292) | 135,910 | ||||||||
| Long-term debt, less current portion | _ | 558,20 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the financial statements include an "Eliminations" column to consolidate financial data across various entities. The total elimination amount related to assets is reported as $(79,292). This figure represents adjustments made to avoid double-counting transactions or balances between Carls's affiliated companies during the consolidation process.
Specifically, the "Due from affiliates" line item shows an elimination of $(79,292). This means that when Carls combined the balance sheets of its various entities, it had to remove $79,292 to accurately reflect the overall financial position of the consolidated group. This adjustment is necessary because transactions between affiliated companies (like loans or payments) appear as both an asset on one company's books and a liability on another's.
For a prospective Carls franchisee, understanding eliminations is less critical than understanding the individual financial performance of the core franchise system. However, it's helpful to know that these adjustments are a normal part of preparing consolidated financial statements for large franchise organizations like Carls, which have numerous related entities and subsidiaries.