Does the text specify if the financial statements of Checkersrallys include a schedule of capital stock?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company has entered into transactions with certain companies or individuals, which are related parties by virtue of being holders of the Company's common stock, by being officers/directors of the Company or because they are controlled by significant stockholders or officers/directors of the Company.
The Company and its franchisees each pay a percentage of sales to the Checkers/Rally's National Production Fund, Inc. (the "Fund" or "NPF"), established for the purpose of creating and producing advertising for the benefit of both Company-operated and franchised restaurants. During the fiscal year ended December 30, 2024 (Successor) and the periods ended January 1, 2024 (Successor) and June 16, 2023 (Predecessor), only one member, representing 25% of the Board of Directors of the Fund, is an employee of the Company. The Fund is not included in the accompanying consolidated financial statements, although the Company's contributions to the Fund are included in advertising expense in the accompanying consolidated statements of operations. Additionally, certain Company-operated restaurants and franchisees participate in advertising co-ops. The Company consolidates advertising co-ops for which it is determined to control on the basis of voting interests, and does not consolidate advertising co-ops it does not control. Co-ops not controlled by the Company are accounted for similarly to the fund. The
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the provided excerpts relating to Checkersrallys' financial statements do not explicitly mention whether the financial statements include a schedule of capital stock. The excerpts focus on related party transactions and consolidated statements of cash flows, detailing items such as net loss, depreciation, amortization, deferred income tax, noncash operating lease expenses, and changes in assets and liabilities. The statements of cash flows provide a detailed breakdown of cash flow activities.
While the excerpts provide a detailed view into the financial activities of Checkersrallys, the absence of a direct reference to a schedule of capital stock means prospective franchisees need to seek additional clarification. Understanding the capital structure is crucial for assessing the financial stability and long-term viability of the franchisor.
Therefore, it is recommended that a prospective Checkersrallys franchisee specifically request and review the schedule of capital stock, or equivalent documentation, to gain a comprehensive understanding of the company's equity structure. This information is essential for making an informed investment decision.