For the Checkersrallys Company, what accounting standard is used for income taxes?

Based on the 2025 Franchise Disclosure Document, Checkersrallys's consolidated statements of cash flows include a line item for "Deferred income tax expense (benefit)." For the period of June 17, 2023 through January 1, 2024, the deferred income tax expense (benefit) was $4 (in thousands). For Sugar 2, 2023, the deferred income tax expense (benefit) was $(7,529) (in thousands). For the predecessor period, the deferred income tax expense (benefit) was $(2,961) (in thousands).

This indicates that Checkersrallys accounts for income taxes using a method that recognizes deferred tax assets and liabilities. Deferred income taxes arise from temporary differences between the tax basis of an asset or liability and its reported amount in the financial statements. This is a standard accounting practice under Generally Accepted Accounting Principles (GAAP).

Prospective franchisees should be aware that deferred tax accounting can be complex and may impact the reported profitability of Checkersrallys. It is advisable to consult with a financial advisor to understand the implications of deferred taxes on the company's financial performance.