What was the operating lease expense for Checkers for the period from June 17, 2023 through January 1, 2024?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
s and restaurant retirement costs line items within the accompanying consolidated statement of operations.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following table provides quantitative information concerning the Company's leases under ASC 842, Leases.
| For the Period For the Year Ended December 30, 2024 | from June 17, | 2023 through January 1, 2024 | For the Period | January 3, 2023 through June 16, 2023 | from | |
|---|---|---|---|---|---|---|
| Finance lease expense: | $ 2,699 | $ | 1,201 | $ | 674 | |
| Amortization of ROU assets | 1,396 | 455 | 237 | |||
| Interest expense on lease liabilities | 1,303 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the operating lease expense for the period from June 17, 2023, through January 1, 2024, was $9,117,000. This figure represents the cost associated with leasing properties for the operation of Checkers restaurants during that time. It's important to note that this expense is specific to the 'Successor' period following a Recapitalization Agreement, as highlighted in the FDD.
Operating lease expenses are a significant factor in the financial performance of any restaurant franchise. For a prospective Checkers franchisee, understanding the components of this expense is crucial. These costs typically cover the use of land and buildings, and can include items such as rent, property taxes, insurance, and maintenance, depending on the lease agreement. The FDD also mentions that Checkers accounts for leases in accordance with ASC 842, which involves classifying leases as either operating or finance leases.
Furthermore, the FDD indicates that Checkers also acts as a sublessor for certain franchised restaurants. The income Checkers receives from these subleases can offset some of their operating lease expenses, as shown by the 'Sublease income' line item. For the period from June 17, 2023, through January 1, 2024, the sublease income was $1,858,000. This income reduces the total net lease cost for that period.
In summary, the operating lease expense of $9,117,000 for the specified period is a key financial metric for Checkers. Prospective franchisees should carefully review the lease terms and conditions, as well as any potential sublease opportunities, to fully understand the financial implications of leasing properties for their franchise operations. Understanding these costs and potential income streams is essential for assessing the overall profitability and financial viability of a Checkers franchise.