As of January 1, 2024, what was the average amortization period for Checkersrallys' leasehold interests?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
r a business combination, the Company recognized "favorable leasehold interests" and "unfavorable leasehold interests" at fair value.
For the period from June 17, 2023 to January 1, 2024 (Successor), no "favorable leasehold interests" or "unfavorable leasehold interests" were derecognized as no associated leases were terminated.
Leasehold interests have definite lives and are amortized on a straight-line basis over the remaining lease term including any optional renewal periods that are likely to be exercised. The average amortization period for leasehold interests as of January 1, 2024 (Successor) was 11.1 years. The Company recognized amortization expens
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the average amortization period for leasehold interests as of January 1, 2024, was 11.1 years. Checkersrallys amortizes these leasehold interests on a straight-line basis over the remaining lease term, including any optional renewal periods that are likely to be exercised.
For a prospective franchisee, this means that the cost of leasehold improvements will be spread out over approximately 11.1 years for accounting purposes. This amortization expense is recognized net of revenue, and for the period ending January 1, 2024, the amortization expense was $0.2 million. Understanding the amortization period is crucial for financial planning and forecasting, as it impacts the reported profitability of the franchise.
It's important to note that this amortization period applies to leasehold interests with definite lives. The actual amortization expense recognized in any given period can fluctuate based on the specific lease terms and renewal options exercised. Franchisees should carefully review their lease agreements and consult with a financial advisor to understand the specific amortization implications for their individual circumstances.