Did Checkers separate lease and non-lease components in their accounting, and if not, what practical expedient did they use?

According to Checkers' 2025 Franchise Disclosure Document, Checkers elected a practical expedient regarding lease and non-lease components. Specifically, Checkers does not separate lease and non-lease components in its accounting. Instead, Checkers accounts for them as a single lease component for all underlying classes of assets.

This accounting decision simplifies Checkers' financial reporting. Lease components typically include the right to use an asset, while non-lease components might cover services like maintenance or common area expenses. By combining these, Checkers avoids the complexity of allocating payments between the different components.

For a prospective Checkers franchisee, this means that the financial statements will present a combined view of lease-related expenses. Franchisees reviewing these statements should be aware that the reported lease expenses include both the cost of using the property and any associated services bundled into the lease agreement. This approach provides a streamlined, though potentially less granular, understanding of Checkers' leasing costs.