What was the value of contributed assets for the CKE Restaurants Acquisitions for Carls during fiscal year 2022?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
As a direct result of our corporate structure and the Securitization Transaction, the CKE Securitization Entities are each a limited liability company that is disregarded as an entity separate from its indirect owners, CKE and CKE Restaurants, for federal and state income tax purposes, and are not jointly and severally liable for any income taxes owed by the parent corporate entities. Further, no tax sharing agreement exists, or is expected to exist, between the CKE Securitization Entities and their indirect parent companies that would require the CKE Securitization Entities to directly or indirectly reimburse their indirect parent co
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the value of contributed assets for the CKE Restaurants Acquisitions during fiscal year 2022 was $2,136,000. These assets were purchased by CKE Restaurants and certain of its wholly-owned subsidiaries on behalf of the CKE Securitization Entities, as per the Management Agreement. For accounting purposes, these purchases are treated as non-cash contributions to the CKE Securitization Entities.
This figure represents the value of property and equipment that CKE Restaurants contributed to its securitization entities specifically related to restaurant acquisitions. It is important to note that this is separate from other contributions of property and equipment.
For a prospective Carls franchisee, understanding these financial details provides insight into how the parent company manages its assets and capital. It also highlights the financial relationship between CKE Restaurants and its related entities. Reviewing these transactions can help a franchisee assess the financial stability and practices of the franchisor.