Does the text specify if the financial statements of Checkersrallys include a schedule of significant accounting policies?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 21: FINANCIAL STATEMENTS]
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
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the financial statements include a summary of significant accounting policies. Specifically, Note 2 of the consolidated financial statements is titled "SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES." This note addresses items such as the use of estimates, fiscal year-end reporting, cash and cash equivalents, and accounts and notes receivable.
The inclusion of this note indicates that Checkersrallys adheres to accounting principles generally accepted in the United States of America (U.S. GAAP), as stated in Note 1. This is a standard practice that ensures transparency and comparability of financial reporting. The note on significant accounting policies is crucial for a prospective franchisee to understand the basis on which Checkersrallys prepares its financial statements.
For a potential Checkersrallys franchisee, understanding these accounting policies is important because it provides insight into how the company recognizes revenue, expenses, and manages its assets and liabilities. For instance, the policy on the use of estimates highlights the areas where management's judgment affects the reported financial results, which can impact profitability and financial stability. Similarly, the policies on cash equivalents and receivables provide insight into the company's liquidity and credit management practices.
Furthermore, the note regarding the fiscal year indicates that Checkersrallys's fiscal reporting periods consist of either 52 or 53 weeks, ending on the Monday closest to December 31. This information is essential for franchisees when comparing their own financial performance against the franchisor's reported figures, ensuring alignment in reporting periods.