What was the balance of deferred financing costs associated with the unfunded balance for Checkers as of January 1, 2024?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
nt (the "Second Lien Credit Agreement"). As the Out-of-Court Restructuring, including the forgiveness of debt, was accounted for under ASC 805 Business Combinations, the Company derecognized previous unamortized debt issuance costs and recognized debt issuance costs incurred for the New Money Loans and Second Out Loans.
For the fiscal period ended January 1, 2024 (Succ
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, for the fiscal period ended January 1, 2024, Checkers amortized $0.1 million of financing costs connected to the unfunded commitment associated with the New Money Loans.
Deferred financing costs are essentially the costs Checkers incurred to secure financing, such as loans. These costs are not immediately expensed but are instead spread out over the life of the loan. This accounting practice provides a more accurate picture of Checkers's financial performance over time, as it matches the expense of the financing with the benefit it provides.
For a prospective Checkers franchisee, understanding deferred financing costs is crucial because it provides insight into the company's financial management and debt obligations. While the amortization of these costs is a non-cash expense, it still impacts the reported net income and overall profitability. A significant amount of deferred financing costs could indicate that Checkers has substantial debt, which might affect its ability to support franchisees or invest in growth initiatives. Therefore, franchisees should consider these costs as part of their due diligence when evaluating the financial health and stability of the Checkers franchise system.