When did Benjamin Franklin Plumbing adopt the private company alternative accounting approach for goodwill?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
Commencing on January 1, 2023, the Company adopted the private company alternative accounting approach for the subsequent accounting for goodwill as provided for in ASU 2014-02, Intangibles - Goodwill and Other (Topic 350): Accounting for Goodwill. As such, the Company amortizes goodwill on a straight-line basis over a period of ten years. The accounting alternative requires the Company to make an accounting policy decision to test goodwill for impairment at either the entity level or the reporting unit level. The Company tests goodwill for impairment at the entity level.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, the company adopted the private company alternative accounting approach for goodwill on January 1, 2023. This accounting change allows Benjamin Franklin Plumbing to amortize goodwill on a straight-line basis over a period of ten years.
For a prospective franchisee, this means that the company's financial statements will reflect goodwill being systematically expensed over a decade, rather than potentially being subject to impairment charges if its value were to decline suddenly. This approach can provide a more predictable and stable view of the company's financial performance.
The FDD also mentions that the accounting alternative requires Benjamin Franklin Plumbing to decide whether to test goodwill for impairment at the entity level or the reporting unit level, and that the company tests goodwill for impairment at the entity level. This indicates that the company assesses the overall goodwill of the entire Benjamin Franklin Plumbing organization, rather than breaking it down by individual franchise units or regions.