How much in transaction costs did Checkers recognize in connection with the Out-of-Court Restructuring?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
g method, respectively. The valuation of intangible assets was prepared by a third-party valuation specialist and incorporates significant unobservable inputs and requires significant judgment and estimates, including the amount and timing of future cash flows.
The Company recognized approximately $15.8 million of transactions costs in connection with the Out-of-Court Restructuring. Transaction costs incurred by the Predecessor during the period from January 3, 2023 to June 16, 2023 (Predecessor) associated with the Out-of-Court Restructuring were approximately $15.6 million of which $3.7 million were contingent upon completion of the Out-of-Court Restructuring. Of the transaction costs incurred by the Predecessor $9.0 million were an assumed liability by the Successor
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the company recognized approximately $15.8 million in transaction costs related to the Out-of-Court Restructuring. These costs were incurred by both the Predecessor and Successor entities during different periods. The Predecessor, from January 3, 2023, to June 16, 2023, incurred approximately $15.6 million in transaction costs, of which $3.7 million was contingent upon the completion of the Out-of-Court Restructuring. Of the transaction costs incurred by the Predecessor, $9.0 million were an assumed liability by the Successor at closing. Additionally, the Successor incurred $0.2 million in costs related to the transaction.
For a prospective Checkers franchisee, this information provides insight into the financial restructuring of the company. The significant transaction costs indicate the complexity and scale of the Out-of-Court Restructuring. It's important to note that the Predecessor's costs included a contingent portion, suggesting some uncertainty in the final expenses. The fact that the Successor assumed a substantial portion of the Predecessor's liabilities highlights the financial impact of the restructuring on the company's balance sheet.
These transaction costs were recorded within general and administrative expenses on the consolidated statements of operations. Franchisees should be aware that such restructuring activities can impact the financial health and stability of the franchisor, which in turn could affect the support and resources available to franchisees. Understanding the context of these costs within the broader financial statements is crucial for assessing the long-term viability of a Checkers franchise.