For Checkers' leases, what costs does the company generally obligate itself to pay for?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
The leases generally obligate the Company to pay for costs associated with property taxes, insurance and maintenance and are evaluated by the Company as fixed or variable in nature. If it is concluded that they are fixed, they are included in the calculation of the lease liability. Fixed lease costs for operating lease payments are recognized on a straight-line basis over the lease term and are included in the restaurant occupancy costs, franchise support and services expenses, general and administrative expenses and restaurant retirement costs line items within the accompanying consolidated statement of operations.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, when Checkers leases land and buildings, the company generally agrees to pay for costs associated with property taxes, insurance, and maintenance. These costs are evaluated to determine if they are fixed or variable. If the costs are determined to be fixed, they are included in the calculation of the lease liability.
These fixed lease costs for operating lease payments are recognized on a straight-line basis over the lease term. These costs are then included in various expense line items within the company's consolidated statement of operations. These line items include restaurant occupancy costs, franchise support and services expenses, general and administrative expenses, and restaurant retirement costs.
This information is relevant to a prospective franchisee because it provides insight into the financial obligations Checkers takes on as a lessee. Understanding these obligations can help franchisees better assess the financial health and stability of the company. Additionally, knowing how these lease costs are accounted for can provide a clearer picture of the company's overall financial performance.