What are the primary sources of revenue for Checkers?

ns and Second Out Loans issued under the Out-of-Court Restructuring. For the same fiscal periods, the Company amortized $0.2 million and $0.1 million of financing costs associated with the unfunded commitment associated with the New Money Loans.

Revenue Recognition

The Company recognizes revenue when the following criteria are met: 1) Contract with the customer has been identified; 2) Performance obligations in the contract have been identified; 3) Transaction price has been determined; 4) Transaction price has been allocated to the performance obligations; and 5) Revenue is recognized when (or as) performance obligations are satisfied.

The Company disaggregates revenues by type: Restaurant sales, Franchise and retail royalty revenue, and Franchise fees and other income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The Company's Restaurant sales includes revenues recognized upon delivery of food to the customer at Company operated restaurants. Restaurant sales are recognized upon sale and are presented net of coupons and discounts, sales tax and other sales-related taxes. Restaurant sales also includes revenues recognized upon delivery of food to a third-party delivery company. The revenue is recognized as a receivable from the third-party delivery service and collection is made within three to seven business days.

Franchise and retail royalty revenues includes royalties on sales by franchised restaurants and sales of licensed products in retail stores. Royalties are based on a percentage of sales of the franchised restaurant and sales of licensed products in retail stores which are recognized as earned.

Franchise fees and other income is comprised of franchise fees, transfer fees, and area development fees that are generated from the sale of rights to develop, own and operate restaurants, as well as sublease rental income and revenues from advertising cooperative funds for those respective cooperative funds that are not consolidated. As a sublessor for the operation of certain franchised restaurants, fees for sublease income are also included within franchise fees and other income line item. The Company accounts for leases using the guidance in ASC 842, Leases, as well as ASC 606, Revenue from Contracts with Customers. See the Note 14 - Leases for further information.

Franchise fees are recorded as deferred revenue when received and recognized as revenue over the contractual term of the franchise agreements once the restaurant has opened.

Area development fees are deferred when received, allocated to each agreed upon restaurant, and recognized as revenue over the contractual term of each respective franchise agreement once the restaurant has opened.

Franchise fees and area development fees are considered highly dependent upon and interrelated with the franchise right granted in the franchise agreement. Transfer fees are fees for selecting pre-approved buyers for franchisee-to-franchisee sales of restaurants. The transfer fees are paid by the new franchisee, deferred when received, and recognized as revenue over the contractual term of the new franchise agreement.

Stock-Based Compensation

The Company accounts for stock-based compensation to employees and directors in accordance with ASC 718, Compensation - Stock Compensation, which requires the recognition of compensation expense for employee stock options and other share-based payments. Under ASC 718, Compensation - Stock Compensation, expense related to employee stock options and other share-based payments is recognized over the relevant service period based on the grant-date fair value of equity-based awards issued to employees and directors. Compensation expense for equity-based awards is generally recognized on a straight-line basis over the requisite service period. Awards that are forfeited prior to vesting do not result in the cumulative recognition of compensation expense. The Company accounts for the impact of forfeitures on stock-based compensation expense as they occur. Refer to Note 13 - Stockholders' Equity for further information.

Advertising Expense

The Company expenses advertising costs for on-air advertising at the first time aired and advertising costs for on-lot merchandising on the first day of advertising. To the extent the Company participates in independent advertising cooperatives, the Company expenses contributions as incurred.

Advertising expense does not include expenses incurred for coupons and discounts, which are recorded as reductions to restaurant sales at the time of sale.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)