Over what period does Checkersrallys recognize compensation expense related to employee stock options and other share-based payments?

According to Checkersrallys's 2025 Franchise Disclosure Document, the company recognizes compensation expense for employee stock options and other share-based payments over the relevant service period. This recognition is based on the grant-date fair value of the equity-based awards issued to employees and directors, following ASC 718, Compensation - Stock Compensation. Generally, the compensation expense for these equity-based awards is recognized on a straight-line basis over the period during which the employee provides service.

For service-based units, Checkersrallys records the stock-compensation expense ratably over a five-year period. However, for performance-based units and any unvested service-based Class B Units, the expense is recognized upon the occurrence of a Liquidity Event. This means that the timing of expense recognition for performance-based units is contingent on a future event that is not certain.

It is important to note that awards forfeited prior to vesting do not result in the cumulative recognition of compensation expense. Checkersrallys accounts for the impact of forfeitures on stock-based compensation expense as they occur, ensuring that only the compensation cost for awards where the requisite service is actually provided is ultimately recognized. This approach aligns with standard accounting practices, where compensation expense is tied to the actual service rendered by the employee or director.