What was the depreciation and amortization for Checkers for the period ended January 3, 2022 (Predecessor)?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
1-10 years | | Buildings | | 3,617 | | 43,349 | 5-30 years | | Equipment, furniture and fixtures | | 19,689 | | 47,162 | 3-10 years | | Construction in progress | | 1,320 32,165 | | 15,639 136,099 | | | Less accumulated depreciation | | (2,856) | | (72,444) | | | Property and equipment, net | $ | 29,309 | $ | 63,655 | | Depreciation expense associated with property and equipment, including property and equipment held under capital leases prior to the adoption of ASC 842, was $2.9 million, $7.9 million, $13.5 million, and $15.4 million for the periods from June 17, 2023 through January 1, 2024 (Successor), from January 3, 2023 through June 16, 2023 (Predecessor), and for the years ended January 2, 2023 (Predecessor), and January 3, 2022 (Predecessor), respectively.
Capitalized software amortization expense was $0.5 million and $0.4 million for the periods from June 17, 2023 through January 1, 2024 (Successor) from January 3, 2023 through June 16, 2023 (Predecessor), respectively, and $0.9 million for years ended January 2, 2023 (Predecessor) and January 3, 2022 (Predecessor), and recorded within "general and administrative expense."
The Company recorded impairment charges related to property and equipment in the amount of $0.3 million for the period ended January 1, 2024 (Successor) due to stores that closed during the period. Additionally, the Company recorded impairment charges of $13.6 million, and $2.2 million for the periods from January 3, 2023 through June 16, 2023 (Predecessor) and the year ended January 2, 2023 (Predecessor), respectively. These impairment charges related to stores that were not profitable, and with investment, were not projected to be profitable. No impairments of property and equipment were recorded in the year ended January 3, 2022.
(Tabular Dollars in Thousands, Except Share and per Share Data)
11. Goodwill and Intangible Assets, Net
As discussed in Note 4. Business Combination, as part of the business combination, the Company recognized $31.8 million of goodwill. As of January 2, 2023 (predecessor) there was no goodwill.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, depreciation and amortization are detailed in the financial statements. For the year ended January 3, 2022 (Predecessor), depreciation expense associated with property and equipment was $15.4 million. Additionally, capitalized software amortization expense was $0.9 million for the year ended January 3, 2022 (Predecessor). These software amortization expenses were recorded within general and administrative expenses.
Furthermore, the amortization expense for franchise agreements for the year ended January 3, 2022 (Predecessor) was $1.1 million, which is recorded in "other depreciation and amortization" in the consolidated statements of operations. Checkers also recorded $0.2 million of amortization expense on reacquired franchise rights for the year ended January 3, 2022 (Predecessor); this amount is included in "franchise and retail royalty revenue."
In total, Checkers' depreciation and amortization expenses for the period ending January 3, 2022 (Predecessor) can be calculated by summing the depreciation expense for property and equipment ($15.4 million), capitalized software amortization expense ($0.9 million), amortization expense for franchise agreements ($1.1 million), and amortization expense on reacquired franchise rights ($0.2 million). This results in a total depreciation and amortization expense of $17.6 million for that period.
Prospective franchisees should understand these figures as they reflect the expenses related to the wear and tear of assets and the amortization of intangible assets, which can impact the overall profitability of Checkers. Reviewing these historical expenses can provide insight into how Checkers manages its assets and the potential future expenses a franchisee might incur.