What inputs does Checkers use to estimate the fair value of its long-lived assets when evaluating them for impairment?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
From time to time, we measure certain nonfinancial assets at fair value on a non-recurring basis in connection with evaluating long-lived assets for impairment. We estimate the fair value of our long-lived assets using significant inputs such as market conditions, comparable properties and Company experience with similar sites, which may be supplemented by appraisals or independent broker opinions of value when necessary, which would generally be categorized within Level 3 of the fair value hierarchy.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, when evaluating long-lived assets for impairment, Checkers estimates their fair value using significant inputs. These inputs include market conditions, comparable properties, and the company's experience with similar sites.
Checkers may also supplement these inputs with appraisals or independent broker opinions of value when necessary. These external evaluations are generally categorized within Level 3 of the fair value hierarchy, indicating they rely on unobservable inputs.
For intangible assets not subject to amortization, such as brand tradenames, Checkers uses the relief from royalty valuation methodology to estimate fair value. This involves significant assumptions about future revenues, discount rates, and royalty rates. Discount rates are based on an assessment of the risk inherent in the intangible assets, while royalty rates are based on projected profitability, actual franchisee agreements, and comparable market rates.