What previous reference rate did Checkers replace with SOFR-based rates in June 2023?

According to Checkers' 2025 Franchise Disclosure Document, on June 16, 2023, Checkers modified its reference rate, replacing the previous LIBOR-based reference rate with SOFR-based rates. This change was made utilizing the optional expedients set forth in ASC 848, and the modified debt is further described in Note 10 within the document.

For a prospective franchisee, this change primarily affects any debt instruments or financial agreements Checkers has in place. The shift from LIBOR (London Inter-Bank Offered Rate) to SOFR (Secured Overnight Financing Rate) is part of a broader industry transition due to the discontinuation of LIBOR. SOFR is considered a more reliable benchmark rate as it is based on actual transactions in the U.S. Treasury repurchase market.

This modification likely has minimal direct impact on franchisees unless they are directly involved in financing arrangements with Checkers that are affected by these reference rates. However, it's important for franchisees to be aware of these changes as they reflect Checkers' approach to financial management and compliance with accounting standards. Franchisees should consult with financial advisors to understand any potential indirect effects on their business.

It is also important to note that the Franchise Disclosure Document mentions the application of specific accounting standards updates (ASUs) issued by the Financial Accounting Standards Board (FASB) related to reference rate reform. These updates provide guidance on how companies should account for the transition from LIBOR to other reference rates, ensuring financial reporting accurately reflects these changes.