What was the reported value of Checkers' operating right-of-use assets as of June 16, 2023?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
-----------------|---|-----------------------------------|-------------------------------------| | Weighted-average remaining lease term-operating leases | | 19.1 years | 19.5 years | | Weighted-average discount rate-finance leases | | 4.15% | 2.99% | | Weighted-average discount rate-operating leases | | 3.94% | 2.07% |
The Company wrote-off right-of-use operating lease assets in the amount of $0.4 million for the period ended January 1, 2024 (Successor) due to stores that closed during the period. Additionally, the Company wrote-
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the company wrote off right-of-use operating lease assets in the amount of $2.9 million for the period ended June 16, 2023. These write-offs, which are listed under the Predecessor period, were due to stores that were not profitable and were not projected to become profitable even with investment.
For a prospective Checkers franchisee, this indicates that Checkers has experienced closures of underperforming stores, leading to the write-off of associated lease assets. This could reflect market challenges, high operating costs, or other factors affecting store profitability. Understanding the reasons behind these write-offs and closures can help a franchisee assess the risks and opportunities associated with investing in a Checkers franchise.
It is important for potential franchisees to investigate the locations and market conditions of previous store closures to better understand the factors that contribute to success or failure. Further due diligence into Checkers' current real estate strategy and criteria for site selection is also advisable. This will help a franchisee evaluate the potential for long-term profitability and sustainability of their investment.