For Checkers, what was the 'current portion of accrued self-insurance' as of January 2, 2023 (Predecessor)?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
ulting expense reduction may be recorded. The Company maintained a $2.1 million and $2.1 million letter of credit as of December 30, 2024 (Successor) and January 1, 2024 (Successor), respectively, as collateral securing general liability claims and selfinsured workers' compensation claims until they are settled. The Company is also self-insured, subject to umbrella policies, 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. The self-insurance balances as of December 30, 2024 (Successor) and January 1, 2024 (Successor) were $4.3 million and $3.8 million, respectively.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the company's liabilities for self-insurance are presented on an undiscounted basis. These liabilities are categorized as "current portion of accrued self-insurance" and "accrued self-insurance, less current portion" in the consolidated balance sheets. As of January 2, 2023 (Predecessor), the "current portion of accrued self-insurance" was $1.7 million.
This figure represents the portion of Checkers's self-insurance liabilities that are expected to be paid out within the next year. Self-insurance typically covers potential losses from workers' compensation and general liability claims, where Checkers assumes the risk up to a certain limit before excess insurance coverage kicks in. The "accrued self-insurance, less current portion" was $2.0 million as of January 2, 2023 (Predecessor).
For a prospective Checkers franchisee, this information indicates that Checkers has significant self-insurance obligations. While the company maintains insurance coverage customary for businesses of its size, franchisees should be aware that the franchisor's financial stability could be impacted by unexpectedly high claims. It is important to note that the company also maintained a $2.0 million letter of credit as of January 2, 2023 (Predecessor), as collateral securing general liability claims and self-insured workers' compensation claims until they are settled.
Franchisees may want to inquire about the historical trends in self-insurance claims and how these claims are managed. Understanding the potential financial impact of these liabilities can help franchisees assess the overall financial health and stability of the Checkers franchise system.