How does Checkersrallys account for coupons and discounts related to food delivery?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
ny amortized $0.1 million of financing costs associated with the New Money Loans and Second Out Loans issued under the Out-of-Court Restructuring. For the same fiscal period, the Company amortized $0.1 million of financing costs associated with the unfunded commitment associated with the New Money Loans.
Revenue Recognition
"Restaurant sales" includes revenues recognized upon delivery of food to the customer at Company-operated restaurants. "Restaurant sales" are recognized upon sale and are presented net of coupons and discounts, sales tax and other sales-related taxes. Revenue is recognized when the food is purchased by the customer, which is when our performance obligation is satisfied. "Restaurant sales" also includes revenues recognized upon delivery of food to a third-party delivery company. The revenue is recognized as a receivable from the third-party delivery service and collection is made within three to seven business days. Delivery sales are recognized net of commissions, fees, taxes, and discounts.
"Franchise and retail royalty revenue" includes royalties on sales by franchised restaurants and sales of licensed products in retail stores. Royalties are based on a percentage of sales of the franchised restaurant and sales of licensed products in retail stores which are recognized as earned.
"Franchise fees and other income" is comprised of franchise fees, transfer fees, and area development fees that are generated from the sale of rights to develop, own and operate restaurants, as well as sublease rental income and revenues from advertising cooperative funds. As a sublessor for the operation of certain franchised restaurants, fees for sublease income are also included within "franchise fees and other income." The Company accounts for leases using the guidance in ASC 842, Leases, as well as ASC 606, Revenue from Contracts with Customers. See the Note 16. Leases for a discussion on leases.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, restaurant sales include revenues recognized upon delivery of food, whether directly to the customer or through a third-party delivery company. These sales are presented net of coupons and discounts, sales tax, and other sales-related taxes. For deliveries made through third-party services, Checkersrallys recognizes revenue as a receivable from the delivery service, with payment typically received within three to seven business days. These delivery sales are also recognized net of commissions, fees, taxes, and discounts.
For restaurant-operated deliveries, the consideration is variable due to coupons and discounts, which are recorded at the time of food delivery. When Checkersrallys uses a third-party delivery partner, they act as an agent, recording revenue net of costs, including commissions, fees, and sometimes taxes. The delivery partner handles web and mobile applications and directly interacts with the end customer, while Checkersrallys prepares and delivers the food to the delivery partner's employees.
For a prospective franchisee, this means that reported sales figures will already reflect deductions for any coupons or discounts offered to customers, as well as any fees or commissions paid to third-party delivery services. This net revenue approach provides a clearer picture of actual earnings. Franchisees should be aware that delivery sales revenue can vary depending on the costs of the delivery service and the specific delivery partner used. Understanding these accounting practices is crucial for accurately assessing the financial performance of a Checkersrallys franchise.