For Checkersrallys, over what period are leasehold improvements depreciated?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment were recorded at fair value in connection with the Merger for the Predecessor periods and in connection with the Out-of-Court Restructuring for the Successor period and are otherwise recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated over the lesser of their estimated useful lives (generally 10 years) or the remaining lease term.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, leasehold improvements are depreciated using the straight-line method. The depreciation period is determined by whichever is shorter: the estimated useful life of the improvements (generally 10 years) or the remaining term of the lease.
For a Checkersrallys franchisee, this means that the cost of any improvements made to the leased property will be spread out as an expense over a period that cannot exceed 10 years, but could be shorter if the lease term is less than 10 years. This depreciation method affects the franchisee's financial statements and tax obligations.
It is important for a prospective Checkersrallys franchisee to understand the terms of their lease agreement and the estimated useful lives of any planned leasehold improvements. This will allow them to accurately project their depreciation expenses and understand the financial impact on their business. Franchisees should consult with a financial professional to fully understand the implications of leasehold improvement depreciation.