What was the accumulated amortization for Checkers' franchise agreements as of January 2, 2023?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
,900 | $ | (6,305) | $ | 23,595 | | Reacquired franchise rights | | = | | = | - E | | 3,220 | | (480) | | 2,740 | | Total finite-lived intangible assets | $ | 1,400 | $ | (51) $ | 1,349 | $ | 33,120 | $ | (6,785) | $ | 26,335 |
(Tabular Dollars in Thousands, Except Share and per Share Data)
Franchise agreements are amortized based on the expected future benefits to be realized. As such, the amortization period for franchise agreements is 15 years (Successor) and 27 years (Predecessor) and amortization expense is recorded on a straight-line basis over such period. We recorded amortization expense of $0.1 million for the period ending January 1, 2024 (Successor), We recorded amortization expense of $0.5 million for the period ended June 16, 2023 (Predecessor) and $1.1 million for each of the years ended January 2, 2023 (Predecessor) and January 3, 2022 (Predecessor), which is recorded in "other depreciation and amortization" in the accompanying consolidated statements of operations.
In connection with the purchase of three restaurants in 2022 from franchisees in Florida, we recorded $0.4 million for reacquired franchise rights in 2022. The reacquired franchise rights are amortized on a straight-line basis over the useful lives of each right. The Successor period did not include the amortization of reacquired franchise rights as they were not ascribed any value as part of the Out-of-Court Restructuring and therefore amortization ceased as of that date.
The Company recorded $0.1 million for the fiscal period ended January 1, 2024 (Successor), $0.1 million for the fiscal period ended June 16, 2023 (Predecessor), $0.5 million for the year ended January 2, 2023 (Predecessor), and $0.2 million for the year ended January 3, 2022 (Predecessor) of amortization expense on reacquired franchise rights. These amounts are included in "franchise and retail royalty revenue" in the accompanying consolidated statements of operations.
In connection with the impairment charge previously discussed in Note 1, the Company recognized impairmen
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the amortization expense for franchise agreements is determined by the expected future benefits. For Successor agreements, the amortization period is 15 years, while for Predecessor agreements, it is 27 years, with the expense recorded on a straight-line basis. Checkers recorded amortization expense of $0.1 million for the period ending January 1, 2024 (Successor), $0.5 million for the period ended June 16, 2023 (Predecessor) and $1.1 million for each of the years ended January 2, 2023 (Predecessor) and January 3, 2022 (Predecessor). These expenses are included in "other depreciation and amortization" in the consolidated statements of operations.
In 2022, Checkers purchased three restaurants from franchisees in Florida and recorded $0.4 million for reacquired franchise rights, which are amortized on a straight-line basis over the useful lives of each right. The Successor period did not include the amortization of reacquired franchise rights because they were not ascribed any value as part of the Out-of-Court Restructuring, ceasing amortization as of that date. The company recorded amortization expense on reacquired franchise rights of $0.1 million for the fiscal period ended January 1, 2024 (Successor), $0.1 million for the fiscal period ended June 16, 2023 (Predecessor), $0.5 million for the year ended January 2, 2023 (Predecessor), and $0.2 million for the year ended January 3, 2022 (Predecessor). These amounts are included in "franchise and retail royalty revenue" in the consolidated statements of operations.
During the period ended June 16, 2023 (Predecessor), Checkers recognized impairment losses related to franchise agreements of $21.7 million and trade names of $28.4 million due to an impairment charge. No impairment losses were recognized during the period ended January 1, 2024 (Successor) or the years ended January 2, 2023 (Predecessor) and January 3, 2022 (Predecessor).
While the specific accumulated amortization for Checkers' franchise agreements as of January 2, 2023, is not explicitly stated, the FDD provides details on amortization expenses, impairment losses, and the accounting treatment of franchise agreements and reacquired franchise rights. A prospective franchisee should request the specific accumulated amortization from Checkers to fully understand the financial implications.