What is the amortization period for franchise agreements for Checkersrallys during the Successor period?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
| | January 1, 2024 (Successor) | | | | | | Januar | y 2, 2 | 023 (Prede | cesso | or) | |--------------------------------------|-----------------------------|----------------|-----------------------------|---------|-------|-----------------|--------|-----------------------------|------------|-------|--------| | | | Gross mount | Accumulated Amortization | | Net | Gross Amount | | Accumulated Amortization | | | Net | | Franchise agreements | $ | 1,400 | $ | (51) $ | 1,349 | $ | 29,900 | $ | (6,305) | $ | 23,595 | | Reacquired franchise rights | | = | | - | - 3 | | 3,220 | | (480) | | 2,740 | | Total finite-lived intangible assets | $ | 1,400 | $ | (51) $ | 1,349 | $ | 33,120 | $ | (6,785) | $ | 26,335 | (Tabular Dollars in Thousands, Except Share and per Share Data)
Franchise agreements are amortized based on the expected future benefits to be realized. As such, the amortization period for franchise agreements is 15 years (Successor) and 27 years (Predecessor) and amortization expense is recorded on a straight-line basis over such period. We recorded amortization expense of $0.1 million for the period ending January 1, 2024 (Succes
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchise agreements are amortized based on the expected future benefits to be realized. The amortization period for franchise agreements is 15 years during the Successor period. Amortization expense is recorded on a straight-line basis over this period.
For the period ending January 1, 2024, which is considered a Successor period, Checkersrallys recorded amortization expense of $0.1 million. This expense is related to the amortization of franchise agreements.
Understanding the amortization period is important for prospective franchisees as it affects the financial statements of Checkersrallys. The amortization of franchise agreements is treated differently between the Successor and Predecessor periods, with the Successor period having a shorter amortization period of 15 years compared to the Predecessor period's 27 years. This difference impacts how the franchise agreements are valued and expensed over time.