What is the gross balance amortization period for Checkersrallys?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
t projected to be profitable.
NOTE 9 - GOODWILL AND INTANGIBLE ASSETS, NET
As discussed in Note 4. Business Combination, as part of the business combination, the Company recognized $31.8 million of goodwill. The changes in goodwill during the successor periods are as follows:
| (Successor) |
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Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the amortization period for the gross balance is 10 years. As of December 30, 2024, the gross balance was $31,767. After accumulated amortization of $4,895, the net balance was $26,872. As of January 1, 2024, the gross balance was also $31,767, with accumulated amortization of $1,730, resulting in a net balance of $30,037.
For a prospective Checkersrallys franchisee, understanding the amortization period is crucial for financial planning and forecasting. Amortization is the process of spreading out the cost of an intangible asset over its useful life. In this case, the gross balance, which likely represents an intangible asset, is being amortized over 10 years. This means that each year, a portion of the asset's value is recognized as an expense on the income statement.
The amortization period affects the franchisee's reported profits and taxable income. A longer amortization period results in lower annual amortization expense, which can increase short-term profitability but may also reduce tax deductions. Conversely, a shorter amortization period increases annual amortization expense, reducing short-term profitability but potentially increasing tax deductions. Franchisees should consult with a financial advisor to understand the tax implications of amortization.
It's important to note that the amortization period can vary depending on the type of asset and the accounting methods used. In Checkersrallys's case, the 10-year amortization period for the gross balance provides a specific timeframe for recognizing the expense associated with this asset. Franchisees should review the financial statements and related notes in the FDD to fully understand the nature of the assets being amortized and the impact on their financial performance.