What is the fair value of the tradenames acquired by 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. These tradenames have an indefinite weighted average useful life. The fair value of the tradenames, along with franchise agreements, was determined using the relief from royalty and the income approach – multi-period excess earning method, respectively.
The valuation of these intangible assets was conducted by a third-party valuation specialist. This valuation incorporates significant unobservable inputs and requires considerable judgment and estimates, particularly concerning the amount and timing of future cash flows. This means that the stated value is based on projections and assumptions about the future performance of the Checkersrallys business and brand.
For a prospective franchisee, this valuation is relevant because it reflects the perceived value of the Checkersrallys brand and its associated trademarks. A higher valuation may suggest a stronger brand reputation and potential for future growth, which could positively influence the franchisee's business. However, it's important to remember that this valuation is based on estimates and is subject to change, especially if the company's actual performance deviates from the initial projections.