When is Checkers' restaurant sales performance obligation satisfied?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Company adopted this pronouncement effective January 3, 2023 and determined that it had no material impact on the consolidated financial statements and related disclosures.
NOTE 3 - REVENUE
Performance Obligations in Contracts with Customers
The restaurant sales performance obligation is satisfied upon the delivery of food to the customer at Company-operated restaurants. The payment terms are immediately satisfied upon the delivery of the food to the customer. The consideration is variable generally due to coupons and discounts which are recorded at the time of food delivery.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The delivery sales performance obligation is satisfied upon the delivery of food to a third-party delivery partner. The Company acts as an agent in delivery sales and, therefore, records the revenue net of costs which include commissions, fees, and in certain cases taxes.
The franchise fees performance obligation is satisfied over the terms of the franchise agreement between the Company and the related franchisees. The franchise royalties performance obligation is satisfied upon the delivery of the food by the franchisee to their customer or to a third-party delivery partner. The Company recognizes the royalty revenue in the period in which the franchise sales occur over the contract term of the franchise agreement.
The franchise agreement provides the franchisee the right to construct, own, and operate a Checkers or Rally's restaurant upon a site accepted by the Company and to use the Checkers and Rally's system in connection with the operation of the restaurant at that site.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the restaurant sales performance obligation is satisfied when food is delivered to the customer at Company-operated restaurants. Payment for the food is due immediately upon delivery. The price the customer pays can vary due to coupons and discounts, which are recorded at the time of delivery.
For delivery sales through a third-party, Checkers' performance obligation is met when the food is delivered to that third-party partner. In these transactions, Checkers acts as an agent and records revenue net of costs like commissions, fees, and sometimes taxes. The net revenue from these delivery sales is generally paid to Checkers within 2 to 7 days from the end of the week in which the sale occurred. The amount of revenue from delivery sales can fluctuate depending on the service costs and the specific delivery partner involved.
For franchisees, the franchise royalties performance obligation is satisfied upon the delivery of the food by the franchisee to their customer or to a third-party delivery partner. Checkers recognizes the royalty revenue in the period in which the franchise sales occur over the contract term of the franchise agreement.