What is the balance at the beginning of the period for Checkers' reserves for restaurant retirement and refranchising costs for the year ended January 2, 2023?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
------|----|------------------------------|----|---------------|----|-----------------|-----|----------|---|--------------------------| | For the year ended January 2, 2023 | S | 4.290 | $ | - | S | - | S | (4.290) | S | - | | For the year ended January 3, 2022 | S | 4.834 | S | 375 | S | (1.842) | S | 923 | S | 4.290 |
The Company adopted ASC 842, Leases, in fiscal year 2022 and at the time of transition the $4.3 million in reserves for restaurant retirement and refranchising costs were included as a reduction to "operating right-of-use assets, net." Subsequent to its adoption of ASC 8
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the company adopted ASC 842, Leases, in fiscal year 2022. At the time of this transition, $4.3 million in reserves for restaurant retirement and refranchising costs were included as a reduction to "operating right-of-use assets, net."
Following the adoption of ASC 842, Checkers assesses leases for impairment and no longer recognizes reserves for restaurant retirement and refranchising costs. Consequently, there was no activity related to restaurant retirement or refranchising for the year ended January 1, 2024, in either the Predecessor or Successor periods.
For a prospective franchisee, this indicates that Checkers' accounting practices have changed, and they no longer maintain specific reserves for restaurant retirement and refranchising costs after fiscal year 2022. The initial reserve of $4.3 million was accounted for during the transition to ASC 842.