What does Checkers consider to be cash equivalents?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
he period ended January 1, 2024 refers to the period from June 17, 2023 to January 1, 2024 (Successor). The period ended June 16, 2023 refers to the period from January 3, 2023 to June 16, 2023 (Predecessor).
Cash and Cash Equivalents
The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. The Company maintains cash and cash equivalent balances with financial institutions in excess of federal insured limits. The Company has not experienced any losses related to these balances, and it believes credit risk to be minimal.
The Company has restricted cash balances related to certain letters of credit and debt ar
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the company considers "all highly liquid instruments with original maturities of three months or less to be cash equivalents." This is a standard accounting practice. Cash equivalents are short-term, highly liquid investments that are easily converted to cash and pose minimal risk of value change.
For a prospective Checkers franchisee, understanding this definition is important for interpreting the company's financial statements. When reviewing Checkers' balance sheets, the "Cash and Cash Equivalents" line item includes not just physical cash but also these short-term investments. This provides a more comprehensive view of Checkers' immediate liquidity.
The FDD also mentions that Checkers maintains cash and cash equivalent balances with financial institutions exceeding federal insured limits and has restricted cash balances related to certain letters of credit and debt arrangements. As of December 30, 2024 (Successor) and January 1, 2024 (Successor), these restricted cash balances were $2.5 million and $2.6 million, respectively. This indicates that while Checkers holds a significant amount of cash, some of it is earmarked for specific purposes and not freely available for general use.