As of January 1, 2024, what has the valuation allowance been adjusted to for Checkers?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
mporary differences that give rise to significant portions of the deferred income tax assets and liabilities recognized within "deferred income tax liabilities" in the accompanying consolidated balance sheets as of December 30, 2024 (Successor) and January 1, 2024 (Successor) were as follows:
| For the Year Ended December 30, 2024 (Successor) | For the Period Ended January 1, 2024 (Successor) | |
|---|---|---|
| Deferred tax assets | ||
| Net operating loss carryforwards | $ 58 | $ - |
| Business interest limitation carryforward | 24,472 | 21,518 |
| Accruals | 2,184 | 2,211 |
| Operating ROU assets | 36,262 | 39,355 |
| Difference between book and tax basis of property and equipment | 3,183 | 9,423 |
| Allowance for credit losses | 163 | 69 |
| Stock-based compensation | - | 32 |
| Deferred revenue and other | 2,291 | 2,507 |
| Deferred tax assets | 68,613 | 75,115 |
| Less: valuation allowance | (10,188) | (38,288) |
| Net deferred tax assets | 58,425 | 36,827 |
| Deferred tax liabilities | ||
| Difference between book and tax basis of brands intangible assets | (49,122) | ( |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the valuation allowance as of January 1, 2024, was adjusted to $38,288. This figure is part of the broader deferred tax assets and liabilities reported in Checkers's consolidated financial statements. These statements provide a snapshot of the company's financial position at that specific point in time.
A valuation allowance is a contra-asset account used to reduce the carrying value of deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In Checkers's case, the $38,288 valuation allowance suggests that Checkers determined it was necessary to reduce the recognized value of its deferred tax assets by this amount, reflecting uncertainty about the company's ability to utilize these assets in the future to reduce its tax obligations.
For a prospective Checkers franchisee, this information is relevant because it provides insight into the company's financial health and its expectations regarding future profitability and tax liabilities. While deferred tax assets and valuation allowances are accounting measures, they can reflect underlying business performance and financial strategies. Understanding these figures can help a franchisee assess the overall financial stability and outlook of Checkers as a franchisor.