What was the total value of Checkersrallys' intangible assets?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
| Fair value of stock consideration Current assets Cash and cash equivalents Accounts and notes receivable, net Inventory Prepaid expenses Other current assets | $ 97,819 17,613 5,828 3,105 3,690 1,600 |
|---|---|
| Total current assets | 31,836 |
| Property and equipment, net | 26,300 |
| Operating right-of-use assets | 152,445 |
| Finance right-of-use assets | 14,831 |
| Intangible assets | 198,900 |
| Favorable leasehold interests | 2,080 |
| Other assets | 2,584 |
| Total assets | $ 428,976 |
| Current liabilities Accounts payable Accrued liabilities Accrued wages and benefits Current portion of deferred revenue Current maturities of long-term debt, and financing obligations Current portion of accrued self-insurance Current portion of operating lease liabilities Current portion of finance lease liabilities | $ (3,126) (21,547) (3,829) (2,761) (923) (1,565) (11,939) (374) |
| Total current liabilities | (46,064) |
| Deferred income tax liabilities | (48,326) |
| Operating lease liability | (158,850) |
| Finance lease liability | (16,548) |
| Long-term debt, less current maturities and deferred financing costs | (74,438) |
| Financing obligations, less current maturities | (7,893) |
| Deferred revenue, less current portion | (7,348) |
| Accrued self-insurance, less current portion | (2,130) |
| Unfavorable leasehold interests | (200) |
| Long-term liabilities | (1,126) |
| Total liabilities | (362,923) |
| Net assets acquired | 66,053 |
| Goodwill | $ 31,766 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The fair values of identifiable intangible assets acquired as of the restructuring date are as follows:
| | Acquisition Date Fair Value | Weighted Average Use
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the total value of intangible assets is $198,900. These assets include tradenames valued at $197,500, which have an indefinite useful life, and franchise agreements valued at $1,400, with a weighted average useful life of 15 years.
The valuation of these intangible assets was determined using the relief from royalty and income approach, specifically the multi-period excess earning method for franchise agreements. Checkersrallys utilized a third-party valuation specialist to prepare this valuation, which incorporates significant unobservable inputs and requires considerable judgment and estimates, especially concerning the amount and timing of future cash flows.
For a prospective Checkersrallys franchisee, understanding the valuation and potential impairment of these intangible assets is crucial. Intangible assets, particularly tradenames, are tested for impairment annually or when circumstances suggest their carrying amount may not be recoverable. If the carrying value exceeds the fair value, an impairment loss is recognized. The fair value is estimated using the relief from royalty valuation methodology, which relies on assumptions about future revenues, discount rates, and royalty rates. These assumptions are based on market conditions, comparable properties, and the company's experience.