What is the amortization method used by Checkers for leasehold interests?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
ess combination, the Company recognized "favorable leasehold interests" and "unfavorable leasehold interests" at fair value.
For the period from June 17, 2023 to January 1, 2024 (Successor), no "favorable leasehold interests" or "unfavorable leasehold interests" were derecognized as no associated leases were terminated.
Leasehold interests have definite lives and are amortized on a straight-line basis over the remaining lease term including any optional renewal periods that are likely to be exercised. The average amortization period for leasehold interests as of January 1, 2024 (Successor) was 11.1 years. The Company recognized amortization expense, net of
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, leasehold interests are amortized using the straight-line method. This amortization occurs over the remaining lease term, which includes any optional renewal periods that are likely to be exercised.
For the period ending January 1, 2024 (Successor), the average amortization period for these leasehold interests was 11.1 years. Checkers recognized amortization expenses, net of revenue, of $0.2 million for the period ending January 1, 2024 (Successor), $0.1 million for the period ending June 16, 2023 (Predecessor), $0.2 million for the period ending January 2, 2023 (Predecessor), and ($0.9) million for the period ending January 3, 2022 (Predecessor).
This means that Checkers systematically reduces the value of its leasehold assets over their useful life using the straight-line method, which allocates an equal amount of expense each period. For a prospective franchisee, understanding the amortization method and period is crucial for assessing the financial implications of leasehold interests on the franchise's profitability and tax obligations. The amortization expenses are recorded in the consolidated statements of operations.