Does the text specify any off-balance sheet arrangements disclosed in the Checkersrallys financial statements?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2025 | $ | 67 |
|---|---|---|
| 2026 | 144 | |
| 2027 | 155 | |
| 2028 | 166 | |
| 2029 | 144 | |
| Thereafter | 7,174 | |
| Total payments | 7,850 | |
| Less: current portion | (67) | |
| Non-current portion | $ | 7,783 |
The Company has several sale-leaseback arrangements in effect for land and buildings for certain store locations. However, these transactions did not qualify for sale accounting under the guidance in ASC 842 and were therefore accounted for as financing transactions. As a result, the Company continues to recognize the restaurant properties on its consolidated balance sheets and has recorded t
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to the 2025 Checkersrallys Franchise Disclosure Document, the company engages in sale-leaseback arrangements for land and buildings at certain store locations. However, because these transactions did not meet the requirements for sale accounting under ASC 842, they are treated as financing transactions. This means that Checkersrallys continues to recognize these restaurant properties on its balance sheets and records the proceeds received from the buyer-lessor as a financial liability.
As of December 30, 2024 (Successor) and January 1, 2024 (Successor), Checkersrallys had approximately $7.9 million in financing obligations recorded within its consolidated balance sheets related to these transactions. This indicates that while the assets are financed through a lease arrangement, the obligations are still reflected on the company's balance sheet, rather than being "off-balance sheet".
For a prospective franchisee, this information is relevant because it provides insight into how Checkersrallys structures its real estate financing. Understanding the company's approach to lease arrangements and how they are accounted for can help franchisees assess the financial health and stability of the franchisor. It also highlights the importance of carefully reviewing the financial statements and related notes to understand the full scope of the company's financial obligations and commitments.