In Hardees' reclassification of prior year amounts, did the reclassifications result from changes to accounting policies, and what was the effect on previously reported net income?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
ormance obligations that are unsatisfied at the end of the period:
| Fiscal: | |
|---|---|
| 2025 | $ 3,477 |
| 2026 | 3,016 |
| 2027 | 2,801 |
| 2028 | 2,665 |
| 2029 | 2,546 |
| Thereafter | 21,459 |
| Total estimated future amortization income | $ 35,964 |
Deferred franchise fees are recorded in other current liabilities and other long-term liabilities in our accompanying Consolidated Balance Sheets as of January 31, 2024 and January 31, 2023, respectively.
**Distributor Concentration
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, certain prior year amounts in the financial statements were reclassified to ensure comparability with the current year's classifications. Specifically, for the year ended January 31, 2023, Hardees reclassified $2,846 of workers compensation expense from Payroll and other employee benefits to Occupancy and other expense.
This reclassification was a matter of presentation and did not stem from any changes to Hardees' accounting policies. The FDD explicitly states that the reclassification had no effect on previously reported net income. This means that while the line items in the financial statements were adjusted for clarity and comparison, the overall profitability of Hardees remained unchanged.
For a prospective franchisee, this indicates that Hardees is transparent in its financial reporting, making adjustments for clarity without altering the fundamental financial results. This type of reclassification is not uncommon and is often done to provide a more accurate picture of the company's financial performance over time. It is a standard accounting practice to ensure consistency in financial reporting.