Does the text specify if the financial statements of Checkersrallys include a schedule of contingencies?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
NOTE 15 - COMMITMENTS AND CONTINGENCIES
Self-Insurance
The Company is partially self-insured for a portion of its expected losses under its workers' compensation and general liability programs. We also carry excess liability limits above the primary coverages as we have determined necessary. We believe we maintain insurance coverage that is customary for businesses of our size and type.
The Company's reserves for both general liability and workers' compensation claims are based, in part, on estimates provided by a third-party specialist of expected losses based on actuarial analysis of historical industry data, as well as the Company's own estimates based on actual historical data. These assumptions are adjusted when warranted by changing circumstances. Should a higher number of claims occur compared to original estimates or if the cost of those claims is higher than anticipated, liabilities for selfinsurance may not be sufficient and additional expense may be recorded. Should the actual claims experience be more favorable than estimated, a resulting expense reduction may be recorded. The Company maintained a $2.1 million and $2.1 million letter of credit as of December 30, 2024 (Successor) and January 1, 2024 (Successor), respectively, as collateral securing general liability claims and selfinsured workers' compensation claims until they are settled. The Company is also self-insured, subject to umbrella policies, for health care claims for eligible participating employees, subject to certain deductibles and limitations. The liabilities for self-insurance are presented on an undiscounted basis in the accompanying consolidated balance sheets. The self-insurance balances as of December 30, 2024 (Successor) and January 1, 2024 (Successor) were $4.3 million and $3.8 million, respectively.
Litigation
From time to time, we are involved in legal proceedings arising in the ordinary course of business relating to matters including, but not limited to, disputes with franchisees, suppliers, employees (including pursuant to employment discrimination and wage and hour laws) and customers, as well as disputes over intellectual property. We do not expect the outcome of pending litigation to have a material impact on our business or consolidated financial position, although it may have a material impact on our consolidated results of operations in any particular annual period.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the financial statements do not explicitly include a schedule of contingencies. However, Note 2, titled "Summary of Significant Accounting Policies," mentions the disclosure of contingent assets and liabilities. This indicates that while a separate schedule might not be present, such items are addressed within the financial statements. Furthermore, Note 15 discusses commitments and contingencies, specifically addressing self-insurance and litigation. This note provides details on how Checkersrallys manages and accounts for these potential liabilities.
Specifically, Checkersrallys is partially self-insured for workers' compensation and general liability programs. The company's reserves for these claims are based on estimates from a third-party specialist, using actuarial analysis and historical data. As of December 30, 2024, and January 1, 2024, Checkersrallys maintained a $2.1 million letter of credit to secure general liability and self-insured workers' compensation claims. The self-insurance balances were $4.3 million and $3.8 million, respectively, on those same dates.
Additionally, Checkersrallys is involved in legal proceedings that arise in the ordinary course of business. These proceedings include disputes with franchisees, suppliers, employees, and customers, as well as intellectual property disputes. While Checkersrallys does not expect pending litigation to have a material impact on its overall financial position, it acknowledges that these matters could materially affect its consolidated results of operations in any particular annual period. Therefore, while a specific schedule of contingencies is not mentioned, the financial statements do address potential liabilities through disclosures and notes.