What was the total value of Checkersrallys' tradenames, which are considered indefinite-lived intangible assets, as of December 30, 2024?

According to Checkersrallys's 2025 Franchise Disclosure Document, the value of their tradenames, considered indefinite-lived intangible assets, was $197,500 as of December 30, 2024. The FDD also provides a comparative figure for January 1, 2024, which was also $197,500, indicating no change in the valuation of these assets during that period. These tradenames are significant assets for Checkersrallys, reflecting the brand's recognition and market presence.

Checkersrallys assesses these indefinite-lived intangible assets for impairment annually, or when events suggest the carrying value may not be recoverable. This assessment is typically performed on the first day of the company's fourth fiscal quarter. Factors considered include under-performance relative to expectations, negative same-store sales growth, and significant industry or economic trends that could negatively impact the business. The impairment evaluation involves market conditions and future discounted cash flows based on forecasted operating results. If the estimated fair value is less than the carrying value, an impairment loss is recorded to adjust the asset's carrying value to fair value.

The fair values of Checkersrallys' tradenames are determined using the relief from royalty method, while franchise agreements are valued using the income approach – multi-period excess earning method. These valuations are prepared by a third-party valuation specialist and incorporate significant unobservable inputs, requiring considerable judgment and estimates, including the amount and timing of future cash flows. This highlights the complexity and subjectivity involved in assessing the value of these intangible assets. For a prospective franchisee, understanding the valuation and potential for impairment of these assets is crucial in assessing the financial health and stability of the Checkersrallys franchise system.