What was the operating lease cost for Checkersrallys for the year ended January 2, 2023 (Predecessor)?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
ort and services expenses," "general and administrative expenses" and "restaurant retirement costs" within the accompanying consolidated statement of operations.
(Tabular Dollars in Thousands, Except Share and per Share Data)
The following table provides quantitative information concerning the Company's leases under ASC 842, Leases.
| For the | Periods | For the Year Ended | ||||
|---|---|---|---|---|---|---|
| th Jar | June 17, 2023 through January 1, 2024 (Successor) January 3, 2023 through June 16, 2023 (Predecessor) | January 2, 2023 (Predecessor) | ||||
| Finance lease cost |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the operating lease cost for the year ended January 2, 2023 (Predecessor) was $19,351. This figure represents the cost associated with operating leases during that specific period. Operating leases are agreements where Checkersrallys uses an asset (like property) without owning it outright.
For a prospective franchisee, understanding the operating lease costs is crucial because it reflects a significant portion of the overhead expenses. These costs can impact the profitability of a Checkersrallys franchise. Franchisees should carefully evaluate the terms of their leases, including the duration, renewal options, and any contingent rental provisions, to manage their financial obligations effectively.
Additionally, the FDD notes that Checkersrallys wrote off right-of-use operating lease assets in the amount of $2.0 million in the year ended January 2, 2023 (Predecessor). These write-offs were due to stores that were not profitable and were not projected to be profitable even with investment. This indicates potential risks associated with lease agreements and store performance that franchisees should consider.
Furthermore, the FDD mentions that under ASC 840, lease expense was $23.4 million for the year ended January 3, 2022 (Predecessor) and is included in various expense categories such as "restaurant occupancy expense", "franchise support and services expenses", "general and administrative expenses" and "restaurant retirement costs". This broader context helps franchisees understand how lease expenses are categorized and accounted for within Checkersrallys's financial statements.