How does Checkersrallys recognize fixed lease costs for operating lease payments?

According to Checkersrallys's 2025 Franchise Disclosure Document, the company recognizes fixed lease costs for operating lease payments on a straight-line basis over the lease term. These costs are included in several line items within the consolidated statement of operations. Specifically, they are allocated to restaurant occupancy costs, franchise support and services expenses, general and administrative expenses, and restaurant retirement costs.

This accounting practice means that Checkersrallys evenly distributes the expense of fixed lease payments over the entire duration of the lease, rather than recognizing the full cost in the period when the payment is made. This approach provides a consistent and predictable expense recognition for these lease costs.

For a prospective Checkersrallys franchisee, understanding this accounting treatment is important for financial planning and analysis. It ensures that the franchisee can anticipate how lease expenses will impact their profit and loss statements over the life of the lease. Additionally, the FDD notes that the leases generally obligate the company to pay for costs associated with property taxes, insurance, and maintenance, which are evaluated as fixed or variable in nature. If deemed fixed, these costs are also included in the calculation of the lease liability.