For Hardees, how are closing costs and other fees related to sale-leaseback transactions treated?

According to Hardees' 2025 Franchise Disclosure Document, closing costs and other fees related to sale-leaseback transactions are treated as deferred financing costs. These costs are recorded as a reduction to the liability balance. They are then amortized to interest expense over the initial minimum lease term.

In practical terms, this means that when Hardees enters into a sale-leaseback transaction, the closing costs and fees don't immediately impact the income statement as an expense. Instead, they reduce the amount of the recorded liability from the sale-leaseback. This reduced liability is then gradually recognized as interest expense over the life of the lease.

For a prospective Hardees franchisee, understanding this accounting treatment is important for assessing the financial implications of sale-leaseback transactions. It provides insight into how these costs are managed and how they affect the company's financial statements over time. This treatment is a standard accounting practice, allowing for a consistent and predictable recognition of these costs over the lease term.