What practical expedient did Checkersrallys elect to adopt in determining the lease term and assessing impairment of right-of-use assets?

According to Checkersrallys's 2025 Franchise Disclosure Document, when adopting accounting standard ASC 842, Leases, Checkersrallys elected to use a practical expedient regarding lease terms and asset valuation. Specifically, Checkersrallys chose to use hindsight when determining the lease term and when assessing impairment of the company's right-of-use assets.

For a prospective franchisee, this means that Checkersrallys, in its financial reporting, has the benefit of looking back at actual outcomes to inform its accounting for leases. This can affect how lease-related assets are valued and how lease obligations are reported on Checkersrallys's balance sheet.

The use of hindsight could provide a more accurate representation of Checkersrallys's financial position related to its leases, as it incorporates real-world data rather than relying solely on initial estimates. However, it's important to note that this accounting choice is specific to Checkersrallys and may not be the standard practice for all companies or franchises.