Did Checkersrallys separate lease and non-lease components, such as common area maintenance fees, by class of underlying asset?

According to Checkersrallys's 2025 Franchise Disclosure Document, when acting as a lessee or sublessor, Checkersrallys does not separate lease and non-lease components for any underlying asset classes. Instead, Checkersrallys accounts for them as a single lease component.

For franchisees, this means that costs like property taxes, insurance, and maintenance, which Checkersrallys is generally obligated to pay, are evaluated to determine if they are fixed or variable. If these costs are determined to be fixed, they are included in the calculation of the lease liability.

Fixed lease costs for operating lease payments are recognized on a straight-line basis over the lease term. These costs are then included in various expense line items within the consolidated statement of operations, such as restaurant occupancy costs, franchise support and services expenses, general and administrative expenses, and restaurant retirement costs.