How does Best Western amortize goodwill, and over what period?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
| | | 2,198 | (1,172) | 1,026 | | Acquired customers: AutoClerk | 1,500 | (1,067) | 433 | | Developed technology: AutoClerk | 1,900 | (1,266) | 634 |
November 30, 2024
| (in thousands) | 2023 | 2022 | |---|---|---| | Beginning balance | $ 17,373 | $ 21,213 | | Recoveries | 1,478 | 1,210 | | Provisions | 794 | (1,650) | | Write offs | (3,220) | (3,400) | | Ending balance | $ 16,425 | $ 17,373 | The Company has elected the private-company alternative to amortize goodwill over 10 years. Amortization expense for goodwill was approximately $0.8 million and $0.8 million for the years ended November 30, 2024 and 2023, respectively, and is estimated to be approximately $0.8 million annually for fiscal years ended 2025 through 2028.
Acquired customers and developed technology are definite-life intangible assets, and as such, amortization expense is calculated using a method that most appropriately reflects expected cash flows from these assets with an amortization period, ranging from 7.5 years to 10 years, depending on the type of asset. Amortization expense for definite-life intangible assets was approximately $0.4 million and $0.4 million for the years ended November 30, 2024 and 2023, respectively, and is estimated to be approximately $0.4 million annually for fiscal years ended 2025 and 2026.
Trademarks and trade names are indefinite-life assets as there is no foreseeable limit to the cash flows gen
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, the company amortizes goodwill over a period of 10 years, having elected the private-company alternative. For the years ended November 30, 2024 and 2023, the amortization expense for goodwill was approximately $0.8 million each year. Best Western estimates that the amortization expense will remain around $0.8 million annually for the fiscal years ending 2025 through 2028.
In addition to goodwill, Best Western also amortizes acquired customers and developed technology, which are considered definite-life intangible assets. The amortization method used is designed to reflect the expected cash flows from these assets, with amortization periods ranging from 7.5 years to 10 years, depending on the specific type of asset. The amortization expense for these definite-life intangible assets was approximately $0.4 million for both the years ended November 30, 2024 and 2023. The company estimates this expense to remain approximately $0.4 million annually for the fiscal years ending 2025 and 2026.
However, trademarks and trade names are treated differently. Best Western considers these to be indefinite-life assets because there is no foreseeable limit to the cash flows they generate. As a result, these assets are not subject to amortization. As of November 30, 2024 and 2023, the value of trademarks and trade names resulting from the WorldHotels acquisition was $1.3 million.