What was the acquisition date fair value of the tradenames for Checkersrallys?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
| Fair value of stock consideration Current assets Cash and cash equivalents Accounts and notes receivable, net Inventory Prepaid expenses Other current assets | $ 97,819 17,613 5,828 3,105 3,690 1,600 |
|---|---|
| Total current assets | 31,836 |
| Property and equipment, net | 26,300 |
| Operating right-of-use assets | 152,445 |
| Finance right-of-use assets | 14,831 |
| Intangible assets | 198,900 |
| Favorable leasehold interests | 2,080 |
| Other assets | 2,584 |
| Total assets | $ 428,976 |
| Current liabilities Accounts payable Accrued liabilities Accrued wages and benefits Current portion of deferred revenue Current maturities of long-term debt, and financing obligations Current portion of accrued self-insurance Current portion of operating lease liabilities Current portion of finance lease liabilities | $ (3,126) (21,547) (3,829) (2,761) (923) (1,565) (11,939) (374) |
| Total current liabilities | (46,064) |
| Deferred income tax liabilities | (48,326) |
| Operating lease liability | (158,850) |
| Finance lease liability | (16,548) |
| Long-term debt, less current maturities and deferred financing costs | (74,438) |
| Financing obligations, less current maturities | (7,893) |
| Deferred revenue, less current portion | (7,348) |
| Accrued self-insurance, less current portion | (2,130) |
| Unfavorable leasehold interests | (200) |
| Long-term liabilities | (1,126) |
| Total liabilities | (362,923) |
| Net assets acquired | 66,053 |
| Goodwill | $ 31,766 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The fair values of identifiable intangible assets acquired as of the restructuring date are as follows:
| | Acquisition Date Fair Value | Weighted Average Use
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the acquisition date fair value of the tradenames is $197,500. The tradenames have an indefinite weighted average useful life. The fair value of the franchise agreements was determined to be $1,400 with a weighted average useful life of 15 years. The total intangible assets acquired were valued at $198,900.
These values were determined using the relief from royalty and the income approach – multi-period excess earning method, respectively. A third-party valuation specialist prepared the valuation of intangible assets, incorporating significant unobservable inputs and requiring significant judgment and estimates, including the amount and timing of future cash flows.
For a prospective Checkersrallys franchisee, understanding the valuation of these intangible assets is crucial because it reflects the brand's strength and market position. The indefinite life assigned to the tradenames suggests that Checkersrallys believes the brand has a lasting value. The valuation methods used, such as relief from royalty and income approach, are standard practices for assessing the worth of such assets, but they rely on future projections and estimates, which can be subject to change.