What factors could trigger an impairment test for Basecamp Fitness's goodwill?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company is required to test goodwill for impairment only when a triggering event occurs that indicates the fair value of the Company may be below its carrying amount. Factors that could trigger an impairment test include, but are not limited to, underperformance relative to historical or projected future operating results, significant change in the manner of use of the acquired assets, or the Company's overall business and significant negative industry or economic trends. No triggering events were identified in the years ended December 31, 2024, 2023 and 2022.
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, the company is required to test goodwill for impairment only when a triggering event occurs. This means that the fair value of the company may be below its carrying amount.
Several factors could trigger an impairment test for Basecamp Fitness. These include underperformance relative to historical or projected future operating results. A significant change in how the acquired assets are used could also trigger a test. Furthermore, the company's overall business performance and significant negative industry or economic trends are factors.
It is important to note that no triggering events were identified in the years ended December 31, 2024, 2023 and 2022. This indicates that, at least in the recent past, no conditions arose that would have necessitated an impairment test for goodwill. As a prospective franchisee, understanding these potential triggers can help in assessing the financial health and stability of the Basecamp Fitness franchise system.