What was the provision for credit losses for Checkersrallys for the year ended December 30, 2024?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
ine if collectability is reasonably assured. If we determine that certain amounts are not probable of collection, we do not recognize the related royalty revenue. The Company writes off the related accounts receivable when it is determined that they are uncollectible.
Credit losses are recorded in general and administrative expenses in the accompanying consolidated statements of operations. The Company had
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the provision for credit losses for the fiscal year ended December 30, 2024, was $582,000. This figure represents an estimate of potential losses from uncollectible accounts receivable, primarily franchise royalties, fees, sublease rents, delivery sales receivables, and retail royalties. Checkersrallys calculates this allowance based on historical collection data and specific identification of at-risk accounts.
Credit losses are recorded as general and administrative expenses on Checkersrallys's consolidated statements of operations. The FDD also notes credit losses of $0.1 million for the period from June 17, 2023, through January 1, 2024, and $0.1 million for the period from January 3, 2023, through June 16, 2023.
Prospective franchisees should understand that Checkersrallys actively monitors franchisees' compliance with franchise agreements and subleases. When a franchisee is in default, Checkersrallys closely tracks royalties to assess collectability. If collection is deemed unlikely, the related royalty revenue is not recognized, and uncollectible accounts receivable are written off. This indicates Checkersrallys's approach to managing and accounting for potential credit losses within its franchise system.