How does Checkers recognize fixed lease costs for operating lease payments?

According to Checkers' 2025 Franchise Disclosure Document, the company recognizes fixed lease costs for operating lease payments on a straight-line basis over the lease term. These costs are included in several line items within the consolidated statement of operations, specifically: restaurant occupancy costs, franchise support and services expenses, general and administrative expenses, and restaurant retirement costs.

This means that Checkers evenly distributes the expense of fixed lease payments over the entire duration of the lease, rather than recognizing the full cost at the beginning or end. This approach provides a consistent and predictable expense recognition for these lease costs. The costs are then allocated across different operational areas, reflecting how the lease expense contributes to various aspects of the business.

For a prospective Checkers franchisee, understanding this accounting practice is important for financial planning and analysis. It ensures that franchisees can anticipate how lease expenses will impact their profit and loss statements over time. Furthermore, it highlights the importance of carefully evaluating lease terms and costs during the site selection and negotiation process, as these factors will directly influence the franchisee's ongoing operating expenses.