Does the text specify any conditions related to the financial data presented for Checkersrallys?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
r after the first anniversary, but prior to the second anniversary, (iii) 7% on or after the second anniversary, but prior to the third anniversary, and (iv) 5% on or after the third anniversary, and (v) 3% on or after the fourth anniversary.
Pursuant to the Out-of-Court Restructuring, each Second Lien Lender exchanged all of its Second Lien Loans for its pro rata share of 5% of the equity of Topco.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fiscal Year
The Company's fiscal reporting periods consist of 52 or 53 weeks ending on the Monday closest to December 31. References included herein to "year" or "years" ended represent fiscal years. The fiscal year ended December 30, 2024 consisted of 52 weeks. The periods January 3, 2023 to June 16, 2023 and June 17, 2023 to January 1, 2024 consisted of 24 and 28 weeks, respectively.
Due to the presentation of the Successor and Predecessor periods, the fiscal year ended December 30, 2024 refers to the period from January 2, 2024 through December 30, 2024 (Successor) and the period ended January 1, 2024 refers to the period from June 17, 2023 to January 1, 2024 (Successor). The period ended June 16, 2023 refers to the period from January 3, 2023 to June 16, 2023 (Predecessor).
Cash and Cash Equivalents
The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. The Company maintains cash and cash equivalent balances with financial institutions in excess of federal insured limits. The Company has not experienced any losses related to these balances, and it believes credit risk to be minimal.
The Company has restricted cash balances related to certain letters of credit and debt arrangements and are presented within cash and cash equivalents on the consolidated balance sheets. Restricted cash balances as of December 30, 2024 (Successor) and January 1, 2024 (Successor) were $2.5 million and $2.6 million, respectively.
Accounts and Notes Receivable, Net
Receivables consist primarily of franchise royalties, franchise fees, sublease rents, delivery sales receivables, and retail royalties. These amounts are recorded net of an allowance for credit losses. Franchisee related accounts receivable are due within 10 days of billing and in some instances, we draw the funds directly from the franchisee's bank account on a predetermined day.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the financial statements are subject to several conditions and qualifications. The company's fiscal reporting periods consist of either 52 or 53 weeks, ending on the Monday closest to December 31st, with references to 'year' or 'years' representing these fiscal years. The fiscal year ended December 30, 2024, consisted of 52 weeks. The periods January 3, 2023 to June 16, 2023 and June 17, 2023 to January 1, 2024 consisted of 24 and 28 weeks, respectively. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ('U.S. GAAP').
Due to an Out-of-Court Restructuring and Recapitalization Agreement, Checkersrallys is presenting a successor period for the fiscal year ended December 30, 2024, and the period of June 17, 2023, through January 1, 2024, and predecessor periods of January 3, 2023, through June 16, 2023, and fiscal years ended January 2, 2023, and January 3, 2022, within the audited financial statements. The company also uses estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period, meaning actual results could differ from those estimates.
These conditions mean that a prospective Checkersrallys franchisee should be aware that the financial data presented may not be directly comparable to other companies with different fiscal years or accounting practices. The use of estimates also introduces an element of uncertainty, as actual results may vary. The division into 'Successor' and 'Predecessor' periods due to the restructuring further complicates year-over-year comparisons and requires careful analysis to understand the company's financial performance across these different periods. A prospective franchisee should consult with a financial advisor to fully understand the implications of these conditions on the financial data presented and to assess the financial health and stability of Checkersrallys.