What amount of letter of credit did Checkers maintain as collateral securing general liability claims and self-insured workers' compensation claims as of January 1, 2024?

According to Checkers' 2025 Franchise Disclosure Document, the company maintained a letter of credit of $2.1 million as of January 1, 2024, to serve as collateral for general liability and self-insured workers' compensation claims until those claims are settled. This letter of credit provides a financial guarantee that Checkers can cover these potential liabilities.

This arrangement is part of Checkers' self-insurance program, where they cover a portion of their expected losses for workers' compensation and general liability. They also carry excess liability limits above the primary coverages. The reserves for these claims are based on estimates from a third-party specialist and Checkers' own historical data. These estimates are adjusted as circumstances change.

For a prospective franchisee, this indicates that Checkers has a strategy in place to manage its risk related to potential claims. The letter of credit ensures that funds are available to cover these claims, which could protect franchisees from certain liabilities. However, it's important to note that if actual claims exceed the estimates, Checkers may need to record additional expenses, which could impact the company's financial performance.

It is also worth noting that the FDD states that the company is also self-insured for health care claims for eligible participating employees, subject to certain deductibles and limitations. The liabilities for self-insurance are presented on an undiscounted basis in the accompanying consolidated balance sheets.