What was the weighted average useful life (in years) for the franchise agreements acquired by Checkersrallys?
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 weighted average useful life for franchise agreements acquired is 15 years. The franchise agreements had an acquisition date fair value of $1,400. The tradenames had an indefinite weighted average useful life and an acquisition date fair value of $197,500. The total intangible assets acquired were valued at $198,900.
This means that Checkersrallys amortizes the value of its franchise agreements over a 15-year period for accounting purposes. Amortization is the process of gradually writing off the initial cost of an asset. In this case, Checkersrallys recognizes the expense associated with the franchise agreements over 15 years rather than all at once in the year of acquisition.
For a prospective franchisee, this information provides insight into how Checkersrallys manages its assets and reports its financial performance. While it doesn't directly impact the franchisee's operations, understanding the franchisor's financial practices can be helpful in assessing the overall stability and financial health of the company. It is important to note that this amortization period relates to Checkersrallys's accounting practices and not the term of the franchise agreement offered to franchisees, which as noted elsewhere in the document, is generally 20 years with a 10-year renewal option.