What was the amount of accounts receivable from NPF and CDSI for Checkersrallys as of January 1, 2024 (or successor)?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
only one member, representing 25% of the CDSI Board of Directors is an employee of the Company. CDSI is not included in the accompanying consolidated financial statements, although the company's contributions to CDSI are included within "restaurant food and paper costs" in the accompanying consolidated statements of operations.
The Company pays invoices on behalf of NPF and CDSI and then bills each for the balance of these invoices each period. This resulted in $2.6 million and $0.7 million of accounts receivable for the NPF and CDSI, resp
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, as of January 1, 2024, the accounts receivable from the National Production Fund (NPF) was $2.6 million, and from Checkers and Rally's Distribution and Services, Inc. (CDSI) was $0.7 million. These figures represent the amounts Checkersrallys bills to NPF and CDSI for invoices the company pays on their behalf. These receivables are included within the 'accounts and notes receivable, net' on Checkersrallys's consolidated balance sheet.
For a prospective Checkersrallys franchisee, understanding these related-party transactions is crucial. The NPF handles advertising, and CDSI manages procurement and quality assurance. The franchisee should recognize that a portion of their payments for advertising and supplies will flow through these entities. The accounts receivable balances reflect the short-term credit Checkersrallys extends to these related entities.
It's important to note that these transactions are with related parties, meaning entities with common ownership or management. While such arrangements are not inherently problematic, franchisees should ensure that the terms are fair and transparent. Any potential conflicts of interest should be carefully evaluated to protect the franchisee's financial interests.
Franchisees should monitor these relationships and the associated financial reporting to ensure that the advertising and procurement services are being provided efficiently and at competitive rates. Understanding the financial dynamics between Checkersrallys, NPF, and CDSI can help franchisees assess the overall financial health and stability of the franchise system.