Does the text specify the scope of entities included in the Checkersrallys financial statements?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
The accompanying consolidated financial statements present the results of the operations, financial position and cash flows of CDI, and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We consolidate all entities where the Company is deemed to have a controlling or voting financial interest, including those that are wholly owned subsidiaries.
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
The Company and its franchisees each pay charges based on volumes of products purchased from suppliers to Checkers and Rally's Distribution and Services, Inc. ("CDSI"), established for the purpose of providing procurement services and quality assurance support for the benefit of both Company-operated and franchised restaurants. During the period from June 17, 2023 through January 1, 2024 (Successor) and the period from January 3, 2023 through June 16, 2023 (Predecessor) and for the year ended January 2, 2023 (Predecessor), only one member, representing 25% of the CDSI Board of Directors is an employee of the Company. CDSI is not included in the accompanying consolidated financial statements, although the company's contributions to CDSI are included within "restaurant food and paper costs" in the accompanying consolidated statements of operations.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the consolidated financial statements include the results of operations, financial position, and cash flows of Checkers Drive-In Restaurants, Inc. (CDI) and its subsidiaries. The document states that all significant intercompany accounts and transactions have been eliminated during consolidation. Checkersrallys consolidates all entities where the company has a controlling or voting financial interest, including wholly-owned subsidiaries.
The FDD also clarifies the treatment of the Checkers/Rally's National Production Fund, Inc. (NPF) and advertising co-ops. Although Checkersrallys and its franchisees contribute a percentage of sales to the NPF for advertising, the NPF is not included in the consolidated financial statements. Instead, Checkersrallys's contributions to the fund are listed under "advertising expense" in the consolidated statements of operations. Similarly, Checkersrallys consolidates advertising co-ops it controls based on voting interests but does not consolidate those it does not control, accounting for them similarly to the NPF.
Furthermore, Checkersrallys and its franchisees pay charges to Checkers and Rally's Distribution and Services, Inc. (CDSI) for procurement services and quality assurance. Like the NPF, CDSI is not included in the consolidated financial statements, but the company's contributions to CDSI are included within "restaurant food and paper costs" in the consolidated statements of operations. These disclosures provide transparency regarding related party transactions and the scope of entities included (or excluded) from Checkersrallys's consolidated financial statements, which is valuable information for prospective franchisees.