How often does Beef O Bradys assess trademarks and trade names for impairment?
Beef_O_Bradys Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company has financial or nonfinancial assets and financial or nonfinancial liabilities that are required to be measured at fair value on a recurring basis. The Company's impairment test of the trademarks or trade names, franchise rights, and liquor license intangible assets, under ASC 350, Intangibles-Goodwill and Other, requires the determination of their fair value.
ASC 820-10, Fair Value Measurement, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the reporting date. The guidance establishes consistency and comparability by providing a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels:
- Level 1 inputs utilize quoted prices for identical assets in active markets that the Company has the ability to access,
- Level 2 inputs are based on other observable market data, such as quoted prices for similar assets and liabilities, and inputs other than quoted prices that are observable, such as interest rates and yield curves,
- Level 3 inputs are developed by management reflecting the Company's assumptions and include situations where there is little or no market activity for the asset or liability.
Source: Item 23 — RECEIPTS. (FDD pages 66–330)
What This Means (2025 FDD)
According to Beef O Bradys's 2025 Franchise Disclosure Document, the company conducts impairment tests of trademarks and trade names as needed. Specifically, the document mentions that under ASC 350, Intangibles-Goodwill and Other, Beef O Bradys is required to determine the fair value of trademarks or trade names, franchise rights, and liquor license intangible assets.
This means that Beef O Bradys assesses the value of its trademarks and trade names to ensure that their recorded value on the company's balance sheet accurately reflects their current market value. If the fair value of these assets declines below their carrying value, an impairment charge is recorded to reduce the asset's value on the balance sheet. This is a standard accounting practice to provide an accurate representation of a company's financial position.
The FDD also explains that fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the reporting date. The document describes a fair value hierarchy with three levels: Level 1 (quoted prices for identical assets in active markets), Level 2 (observable market data), and Level 3 (management's assumptions). This hierarchy is used to determine the inputs for valuation techniques when measuring fair value.
For a potential Beef O Bradys franchisee, this indicates that the company takes its trademarks and trade names seriously and monitors their value. While the FDD does not specify the exact frequency of these impairment tests, it confirms that they are performed as required by accounting standards. A prospective franchisee may want to inquire about the specific triggers or events that would prompt an impairment test and how the valuation process is conducted to fully understand the franchisor's approach to managing these key assets.