For Checkers, what were the self-insurance balances as of December 30, 2024, and January 1, 2024?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
f claims occur compared to original estimates or if the cost of those claims is higher than anticipated, liabilities for selfinsurance may not be sufficient and additional expense may be recorded. Should the actual claims experience be more favorable than estimated, a resulting expense reduction may be recorded. The Company maintained a $2.1 million and $2.1 million letter of credit as of December 30, 2024 (Successor) and January 1, 2024 (Successor), respectively, as collateral securing general liability claims and selfinsured workers' compensation claims until they are settled. The Company is also self-insured, subject to umbrella policies, for health care claims for eligible participating employees, su
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the company maintains self-insurance reserves to cover potential losses related to workers' compensation, general liability, and healthcare claims for eligible employees. These reserves are based on estimates from a third-party specialist, incorporating actuarial analysis of historical industry data and Checkers' own historical data. These estimates are adjusted as needed to reflect changing circumstances. To secure general liability and self-insured workers' compensation claims, Checkers maintained a $2.1 million letter of credit as of both December 30, 2024, and January 1, 2024.
The FDD indicates that Checkers' self-insurance balances were $4.3 million as of December 30, 2024, and $3.8 million as of January 1, 2024. These balances reflect the company's estimated liabilities for self-insurance, presented on an undiscounted basis in the consolidated balance sheets.
For a prospective franchisee, this means Checkers bears a certain level of risk for potential claims, up to the limits of its self-insurance coverage. While Checkers believes its insurance coverage is customary for businesses of its size and type, there is a risk that if actual claims exceed the estimated reserves, additional expenses may be recorded. Conversely, if claims are lower than expected, Checkers may record an expense reduction. Franchisees should consider this aspect of Checkers' financial structure and how it might affect the company's overall financial health and stability.