v3.25.2
Independent Operator Notes and Independent Operator Receivables
 6 Months Ended
Jun. 28, 2025
Receivables [Abstract]  
Independent Operator Notes and Independent Operator Receivables Independent Operator Notes and Independent Operator Receivables
The amounts included in IO notes and IO receivables consist primarily of funds we loaned to IOs, net of estimated uncollectible amounts. IO notes, which are payable on demand and have no maturity date, typically bear interest at rates between 4.50% and 9.95%. Accrued interest receivable on IO notes is included within the "independent operator receivables and current portion of independent operator notes, net of allowance" line item on the condensed consolidated balance sheets and was $3.5 million and $3.0 million as of June 28, 2025 and December 28, 2024, respectively. There were no IO notes that were past due or on a non-accrual status due to delinquency as of June 28, 2025 or December 28, 2024. Notes and receivables from our IOs participating in our Temporary Commission Adjustment Program ("TCAP"), as detailed below, are not considered to be past due or on a non-accrual status due to delinquency and are excluded from such measures.
IO notes and IO receivables are financial assets which are measured and carried at amortized cost. An allowance for expected credit losses is deducted from (for expected losses) or added to (for expected recoveries) the amortized cost basis of these assets to arrive at the net carrying amount expected to be collected for such assets.
The allowance is estimated using an expected loss framework, which includes information about past events, current conditions, and reasonable and supportable forecasts that impact the collectibility of the reported amounts of the assets over their lifetime. The allowance is evaluated on a collective basis for assets with shared risk characteristics and credit quality indicators. The primary shared risk characteristic and credit quality indicator pools that we use as a basis for collective evaluation include:
•TCAP — Includes the notes and receivables from IOs with stores that have been open for more than 18 months that are participating in our TCAP as of the end of each reporting period. TCAP allows us to provide a greater commission to participating IOs who require assistance in meeting their working capital needs for various reasons, such as new or increased competition or differences in IO skills and experience.
•Non-TCAP — Includes the notes and receivables from IOs with stores that have been open for more than 18 months that are not participating in TCAP as of the end of each reporting period.
•New store — Includes the notes and receivables from IOs with stores that have been open for less than 18 months as of the end of each reporting period, and may or may not be participating in TCAP.
Assets without such shared risk characteristics or credit quality indicators, such as assets with unique circumstances or with delinquencies and historical losses in excess of their TCAP, non-TCAP or new store peers are evaluated on an individual basis.
Amounts due from IOs and the related allowances as of June 28, 2025 and December 28, 2024 consisted of the following (amounts in thousands):
Allowance
Net
GrossCurrent PortionLong-term Portion
Total
Current PortionLong-term Portion
June 28, 2025
Independent operator notes$51,505 $(335)$(12,091)$39,079 $1,820 $37,259 
Independent operator receivables27,455 (9,445)(1,307)16,703 14,359 2,344 
Total$78,960 $(9,780)$(13,398)$55,782 $16,179 $39,603 
Allowance
Net
GrossCurrent PortionLong-term Portion
Total
Current PortionLong-term Portion
December 28, 2024
Independent operator notes$46,917 $(368)$(11,454)$35,095 $471 $34,624 
Independent operator receivables24,054 (5,402)(1,255)17,397 15,580 1,817 
Total$70,971 $(5,770)$(12,709)$52,492 $16,051 $36,441 
A summary of activity in the IO notes and IO receivables allowance was as follows (amounts in thousands):
13 Weeks Ended26 Weeks Ended
June 28,
2025		June 29,
2024		June 28,
2025		June 29,
2024
Beginning balance$21,611 $16,007 $18,479 $16,151 
Provision for IO notes and IO receivables reserves3,291 1,338 6,574 1,891 
Write-off of uncollectible IO notes and IO receivables(1,724)(781)(1,875)(1,478)
Ending balance
$23,178 $16,564 $23,178 $16,564 
The following table presents the outstanding gross balance of IO notes by fiscal year of origination and credit quality indicator as of June 28, 2025 (amounts in thousands):
Fiscal Year of Origination
Credit Quality Indicator2025 (YTD)2024202320222021PriorTotal
TCAP$1,605 $4,347 $4,581 $4,452 $1,539 $2,167 $18,691 
Non-TCAP3,466 4,973 3,908 4,072 3,074 3,692 23,185 
New store5,232 4,397 — — — — 9,629 
Total$10,303 $13,717 $8,489 $8,524 $4,613 $5,859 $51,505 
TCAP IO Notes
Notes of IOs participating in our TCAP represented 45.7% and 49.1% of total IO note balances, gross, as of June 28, 2025 and December 28, 2024, respectively.
A total of $2.4 million of IO notes were added into our TCAP during the 13 weeks ended June 28, 2025. The weighted-average contractual interest rate of these IO notes was 4.50% as of June 28, 2025, a reduction from the standard rate of 9.95%. In addition, $1.2 million of IO notes were transferred from TCAP to Non-TCAP during the 13 weeks ended June 28, 2025.
A total of $3.5 million of IO notes were added into our TCAP during the 26 weeks ended June 28, 2025. The weighted-average contractual interest rate of these IO notes was 4.50% as of June 28, 2025, a reduction from the standard rate of 9.95%. In addition, $1.9 million of IO notes were transferred from TCAP to Non-TCAP during the 26 weeks ended June 28, 2025.