What is 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. This valuation is an important figure in the company's financial statements, representing the estimated worth of the Checkersrallys brand names at the time of acquisition. The tradenames have an indefinite weighted average useful life.
This valuation was determined using the relief from royalty method and was prepared by a third-party valuation specialist. This process incorporates significant unobservable inputs and requires considerable judgment and estimates, especially concerning the amount and timing of future cash flows. For a prospective franchisee, understanding how these intangible assets are valued is crucial because it reflects the perceived strength and longevity of the Checkersrallys brand.
The fair value of tradenames can influence the overall financial health and stability of Checkersrallys. While the tradenames have an indefinite life, they are still subject to impairment tests. If the value of the tradenames were to decline, it could lead to impairment charges, which would negatively impact the company's financial performance. Therefore, the initial valuation and ongoing assessment of these tradenames are important for both the franchisor and the franchisee.