What was the reported value of Checkersrallys' intangible assets, net, as of January 1, 2024?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
| Fiscal year ending | A | mount |
|---|---|---|
| 2024 | $ | 3,166 |
| 2025 | 3,166 | |
| 2026 | 3,166 | |
| 2027 | 3,227 | |
| 2028 | 3,166 | |
| Thereafter | 14,146 | |
| Total | $ | 30,037 |
Intangible assets consisted of the following as of January 1, 2024 (Successor) and January 2, 2023 (Predecessor):
| | ary 1, 2024 u
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the total value of intangible assets, net, was reported as $198,849,000 as of January 1, 2024. This figure is comprised of two components: tradenames, valued at $197,500,000, and finite-lived intangible assets, net, which are valued at $1,349,000.
For a prospective franchisee, understanding the composition and valuation of these intangible assets is crucial. Intangible assets like tradenames represent the brand's recognition and reputation, which can significantly impact a franchisee's ability to attract customers. The finite-lived intangible assets, on the other hand, may include items like franchise agreements or intellectual property with a limited lifespan.
The valuation methods for these assets, as mentioned in the FDD, involve using the relief from royalty and the income approach – multi-period excess earning method. These methods rely on various assumptions and estimates, including future cash flows, which can be subjective and may impact the reported value. It's important for franchisees to recognize that these values are not static and can change over time due to factors like market conditions, brand performance, and accounting standards.
Therefore, a potential Checkersrallys franchisee should consider these intangible asset values as part of their overall assessment of the franchise's financial health and brand strength. Further due diligence, including consulting with financial advisors, is recommended to fully understand the implications of these intangible assets on the franchise's potential profitability and long-term value.