What valuation methodologies does Auntie Annes use to estimate fair value?

According to Auntie Annes's 2024 Franchise Disclosure Document, the company employs multiple valuation methodologies to estimate fair value, including discounted cash flow models. The operating assumptions used in these models are generally consistent with past performance and the projections and assumptions used in the company's current operating plan. However, these assumptions are subject to change due to shifting economic and competitive conditions.

For intangible assets such as tradenames, Auntie Annes may use a qualitative assessment or a quantitative one-step assessment annually or more frequently if circumstances indicate potential impairment. If the fair value of a tradename exceeds its carrying value under either assessment method, the tradename is not considered impaired. Conversely, if the carrying value exceeds the fair value, an impairment charge is recorded for the difference.

Additionally, the fair value of stock options granted is estimated using the Black-Scholes option pricing model on the grant date, based on specific assumptions. For lease liabilities and right-of-use assets, the present value of remaining lease payments is calculated using the company's incremental borrowing rate, as the rate implicit in the leases is not readily determinable. These fair value measurements are crucial for financial reporting and ensuring the accuracy of asset valuations within Auntie Annes's financial statements.