What amount of goodwill did Checkersrallys recognize as part of the business combination?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
vely. These impairment charges related to stores that were not profitable, and with investment, were not projected to be profitable. No impairments of property and equipment were recorded in the year ended January 3, 2022.
(Tabular Dollars in Thousands, Excep
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the company recognized $31.8 million of goodwill as part of a business combination. This recognition occurred during the Successor period, following a business combination detailed in Note 4 of the financial statements. Goodwill, in this context, represents the excess of consideration transferred over the net fair values of acquired assets and assumed liabilities. As of January 2, 2023 (predecessor), there was no goodwill recorded.
For a prospective Checkersrallys franchisee, understanding goodwill is crucial as it reflects the intangible value associated with the brand and its operations. The fact that Checkersrallys recognized a substantial amount of goodwill suggests a significant investment or valuation during the business combination. This goodwill is amortized over a 10-year period using the straight-line method, which means the expense is spread evenly over those years.
It's also important to note that Checkersrallys assesses goodwill for impairment, which could affect the company's financial statements if the fair value of the company falls below its carrying amount. Franchisees should be aware of these accounting practices, as they can influence the financial health and stability of Checkersrallys, potentially impacting the support and resources available to franchisees.