Over what period does Checkers amortize capitalized software?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
ed December 30, 2024 (Successor) and for the periods from June 17, 2023 through January 1, 2024 (Successor) and from January 3, 2023 through June 16, 2023 (Predecessor), respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Company capitalizes certain costs in development of internal-use software. These costs are capitalized during the application development stage and include direct costs of materials and services. As of December 30, 2024 (Successor) and January 1, 2024 (Successor) the Company had capitalized software costs of $0 million and $0.4 million, net of accumulated amortization. These amounts are included within the other assets line item in the accompanying consolidated balance sheets. The capitalized software is amortized on a straight-line basis over its estimated useful life.
Capitalized software amortization expense was $0.4 million, $0.5 million and $0.4 million for the fiscal year ended December 30, 2024 (Suc
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the company amortizes capitalized software on a straight-line basis over its estimated useful life.
For a prospective franchisee, this means that Checkers invests in internal-use software, capitalizing certain development costs like materials and services during the application development stage. These capitalized costs are then systematically expensed over the software's useful life through amortization. As of December 30, 2024, Checkers had $0 million in capitalized software costs, net of accumulated amortization. As of January 1, 2024, the company had $0.4 million in capitalized software costs, net of accumulated amortization.
The capitalized software costs are included within the other assets line item in the consolidated balance sheets. Capitalized software amortization expense was $0.4 million for the fiscal year ended December 30, 2024, $0.5 million for the period from June 17, 2023, through January 1, 2024, and $0.4 million for the period from January 3, 2023, through June 16, 2023. These expenses are recorded within general and administrative expenses in the consolidated statements of operations.
While the FDD specifies the amortization method (straight-line), it does not state the estimated useful life that Checkers uses to amortize capitalized software. A prospective franchisee should seek clarification from Checkers regarding the specific estimated useful life they assign to capitalized software, as this will impact the annual amortization expense and, consequently, the franchisee's financial statements.