Under what circumstances does Annex Brands test intangible assets with indefinite lives for impairment more frequently than annually?

According to Annex Brands' 2025 Franchise Disclosure Document, intangible assets with indefinite lives are typically tested for impairment at least annually. However, Annex Brands will test these assets more frequently if circumstances indicate potential impairment. This means that if there are events or changes in circumstances that suggest the value of these intangible assets may have declined, Annex Brands will conduct an impairment test sooner than the annual schedule. This ensures that the financial statements accurately reflect the value of these assets.

For a prospective Annex Brands franchisee, this policy is relevant because it affects the financial health and reporting of the company. If Annex Brands recognizes an impairment, it could impact the company's profitability and balance sheet. While the FDD does not specify what circumstances would trigger more frequent testing, examples could include significant economic downturns, changes in market conditions, or adverse legal or regulatory changes that specifically affect the value of the brands or trademarks held by Annex Brands.

It is important to note that the FDD does not provide specific details on how Annex Brands determines whether circumstances indicate potential impairment. This determination is based on the company's judgment and assessment of various factors. A prospective franchisee may want to inquire about the specific policies and procedures Annex Brands uses to identify potential impairment triggers and how these assessments are conducted. Understanding these policies can provide a better insight into the company's financial management practices and risk assessment processes.