What was Hardees' estimated liability for self-insurance as of January 31, 2024?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
ngible asset and measure the amount of impairment, if any.
Our definite-lived intangible assets consist of franchise agreements and favorable lease agreements and are amortized on a straight-line basis over their estimated useful lives. Our definite-lived intangible assets are tested for impairment when events or circumstances indicate the carrying value may be impaired. Refer to discussion of facility action charges for a discussion of impairment of restaurant-level long-lived assets.
Deferred Financing Costs
Deferred financing costs are capitalized and amortized, utilizing the effective interest method, as a component of interest expense over the terms of the respective
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, as of January 31, 2024, Hardees' estimated liability for self-insurance was $13,113. This figure represents the company's estimated obligations for covering a portion of losses related to workers' compensation, general liability, and auto liability claims. Hardees uses actuarial methods to estimate these liabilities, considering historical claim losses, loss development, and unpaid losses for each category. These claims are discounted using a risk-free interest rate, which was 2.5% as of the same date.
Self-insurance is a common practice where companies retain the financial risk for certain losses instead of transferring that risk entirely to an insurance company. Hardees' approach involves setting aside funds to cover these potential liabilities. The estimated liability can fluctuate based on claims experience and actuarial evaluations. For instance, the document indicates that the estimated liability for self-insurance was $17,996 as of January 31, 2023, which is higher than the 2024 figure.
For a prospective Hardees franchisee, understanding these self-insurance liabilities is important because it reflects the financial responsibilities Hardees assumes for certain risks. While franchisees may have their own insurance obligations, the financial stability and risk management practices of the franchisor can impact the overall health of the franchise system. Changes in these liabilities from year to year could indicate shifts in risk exposure or the effectiveness of Hardees' risk management strategies. Therefore, it would be prudent for a potential franchisee to discuss these figures with Hardees to understand the implications for the franchise system.