What is the purpose of Checkers and Rally's Distribution and Services, Inc. (CDSI)?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
to the fund. The
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
contributions to the Fund represent 0.5% of net restaurant sales, while contributions to the advertising co-ops range from 0.5% to 4.25% of net restaurant sales.
The Company and its franchisees each pay charges based on volumes of products purchased from suppliers to Checkers and Rally's Distribution and Services, Inc. ("CDSI"), established for the purpose of providing procurement services and quality assurance support for the benefit of both Company-operated and franchised restaurants. During the fiscal year ended December 30, 2024 (Successor) and the period from June 17, 2023 through January 1, 2024 (Successor) and the period from January 3, 2023 through June 16, 2023 (Predecessor) only one member, representing 25% of the CDSI Board of Directors is an employee of the Company. CDSI is not included in the accompanying consolidated financial statements, although the company's contributions to CDSI are included within restaurant food and paper costs in the accompanying consolidated statements of operations.
The Company pays invoices on behalf of NPF and CDSI and then bills each for the balance of these invoices each period. As of December 30, 2024 (Successor), there was approximately $2.0 million and $1.0 million of accounts receivable due from the NPF and CDSI, respectively. As of January 1, 202
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, Checkers and Rally's Distribution and Services, Inc. (CDSI) is established to provide procurement services and quality assurance support for both company-operated and franchised restaurants. Both Checkers, the company, and its franchisees pay charges based on the volume of products purchased from suppliers to CDSI.
CDSI is not included in the consolidated financial statements of Checkers. However, Checkers's contributions to CDSI are included within "restaurant food and paper costs" in the consolidated statements of operations. The FDD also notes that for the fiscal year ended December 30, 2024, and the periods from June 17, 2023, through January 1, 2024, and from January 3, 2023, through June 16, 2023, only one member, representing 25% of the CDSI Board of Directors, is an employee of Checkers.
Furthermore, Checkers pays invoices on behalf of CDSI and then bills CDSI for the balance of these invoices each period. As of December 30, 2024, there was approximately $1.0 million of accounts receivable due from CDSI, while as of January 1, 2024, the accounts receivable due from CDSI was approximately $0.7 million. These accounts receivable for CDSI are included in the accounts and notes receivable, net, in the consolidated balance sheets. This arrangement suggests that CDSI plays a crucial role in the supply chain and quality control for Checkers restaurants, and its financial interactions with Checkers are carefully tracked and accounted for.