How are Checkers' franchise agreements amortized?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
,900 | $ | (6,305) | $ | 23,595 | | Reacquired franchise rights | | = | | = | - E | | 3,220 | | (480) | | 2,740 | | Total finite-lived intangible assets | $ | 1,400 | $ | (51) $ | 1,349 | $ | 33,120 | $ | (6,785) | $ | 26,335 |
(Tabular Dollars in Thousands, Except Share and per Share Data)
Franchise agreements are amortized based on the expected future benefits to be realized. As such, the amortization period for franchise agreements is 15 years (Successor) and 27 years (Predecessor) and amortization expense is recorded on a straight-line basis over such period. We recorded amortization expense of $0.1 million for the period ending January 1, 2024 (Successor), We recorded amortization expense of $0.5 million for the period ended June 16, 2023 (Predecessor) and $1.1 million for each of the years ended January 2, 2023 (Predecessor) and January 3, 2022 (Predecessor), which is recorded in "other depreciation and amortization" in the accompanying consolidated statements of operations.
In connection with the purchase of three restaurants in 2022 from franchisees in Florida, we recorded $0.4 million for reacquired franchise rights in 2022. The reacquired franchise rights are amortized on a straight-line basis over the useful lives of each right. The Successor period did not include the amortization of reacquired franchise rights as they were not ascribed any value as part of the Out-of-Court Restructuring and therefore amortization ceased as of that date.
The Company recorded $0.1 million for the fiscal period ended January 1, 2024 (Successor), $0.1 million for the fiscal period ended June 16, 2023 (Pred
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, franchise agreements are amortized based on the expected future benefits to be realized. For agreements under the 'Successor' arrangement, the amortization period is 15 years, while for 'Predecessor' agreements, it is 27 years. The amortization expense is recorded on a straight-line basis over these periods.
For the period ending January 1, 2024 (Successor), Checkers recorded amortization expense of $0.1 million. For the period ended June 16, 2023 (Predecessor), the amortization expense was $0.5 million, and for each of the years ended January 2, 2023 (Predecessor) and January 3, 2022 (Predecessor), it was $1.1 million. These expenses are recorded in "other depreciation and amortization" in the consolidated statements of operations.
In 2022, Checkers recorded $0.4 million for reacquired franchise rights related to the purchase of three restaurants in Florida. These reacquired franchise rights are amortized on a straight-line basis over the useful lives of each right. The Successor period did not include the amortization of reacquired franchise rights because they were not assigned any value as part of the Out-of-Court Restructuring, and amortization ceased as of that date. The company recorded amortization expense on reacquired franchise rights of $0.1 million for the fiscal period ended January 1, 2024 (Successor), $0.1 million for the fiscal period ended June 16, 2023 (Predecessor), $0.5 million for the year ended January 2, 2023 (Predecessor), and $0.2 million for the year ended January 3, 2022 (Predecessor). These amounts are included in "franchise and retail royalty revenue" in the consolidated statements of operations.