What was the sublease income for Checkers for the period from January 3, 2023 through June 16, 2023?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
to be variable. Variable sublease rental income recorded for the fiscal year ended December 30, 2024 (Successor) and the periods from June 17, 2023 through January 1, 2024 (Successor) and from January 3, 2023 through June 16, 2023 (Predecessor), was $0.1 million, $0.1 million, and $0.1 million, respectively.
The Company is the sublessor on operating leases. The revenue from these subleases is recorded in franchise fees and other income in the accompanying consolidated statements of operations. Sublease rental income recorded for fiscal year ended December 30, 2024 (Successor) and the periods from June 17, 2023 through January 1, 2024 (Successor) and from January 3, 2023 through June 16, 2023 (Predecessor) was $2.0 million, $1.9 million, and $1.0 million, respectively.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the sublease rental income recorded for the period from January 3, 2023 through June 16, 2023, was $1.0 million. This income is classified as 'predecessor' income due to a recapitalization agreement. This means that Checkers, as a company, subleases land and buildings associated with some of its restaurants.
The revenue Checkers receives from these subleases is recorded as part of 'franchise fees and other income' within their consolidated statements of operations. These subleases typically obligate the sublessee to cover costs related to property taxes, insurance, and maintenance, which are considered variable costs.
For a prospective franchisee, this indicates that Checkers engages in subleasing activities, which contribute to the company's overall revenue. However, this income is not directly related to the operations of a franchised location. The franchisee will not receive this sublease income. It's important to understand how Checkers manages its leases and subleases, as it could indirectly affect the support and resources available to franchisees.
The FDD also mentions variable sublease rental income of $0.1 million for the same period. It is important to note the distinction between 'sublease rental income' and 'variable sublease rental income' to fully understand Checkers' financial statements. A franchisee should inquire about the nature of these different income streams and how they impact the company's financial health.