To which two reporting units is goodwill allocated for Best Western?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
Goodwill is allocated to two reporting units: (i) WorldHotels, and (ii) AutoClerk. Activity by reporting unit in the current and prior period is organized by reporting unit noted below.
Goodwill has been allocated to two reporting units: (i) WorldHotels, and (ii) AutoClerk. The Company performed a quantitative impairment analysis for the WorldHotels reporting unit in both 2024 and 2023. As of November 30, 2024 and November 30, 2023, the Company determined that the fair value of the WorldHotels reporting unit exceeded the carrying value and no impairment was recorded. The Company performed a qualitative impairment analysis for the AutoClerk reporting unit during both 2024 and 2023, concluding that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount (see note 15).
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, goodwill is allocated to two specific reporting units within the organization. These units are WorldHotels and AutoClerk. This allocation is significant for financial reporting and impairment testing purposes. Goodwill, in accounting terms, represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business acquisition.
The allocation of goodwill to WorldHotels and AutoClerk means that Best Western assesses the value of these units separately when determining if the goodwill has been impaired. Impairment occurs when the fair value of a reporting unit falls below its carrying value, potentially leading to a write-down of the goodwill. The FDD notes that Best Western performed a quantitative impairment analysis for the WorldHotels reporting unit in both 2024 and 2023 and determined that the fair value exceeded the carrying value, resulting in no impairment recorded.
For AutoClerk, Best Western performed a qualitative impairment analysis during the same periods, concluding that it was more likely than not that the fair value of the reporting unit was greater than its carrying amount. This indicates that Best Western monitors the financial performance and fair value of these reporting units to ensure that the recorded goodwill remains justified. Prospective franchisees may want to inquire about the financial performance of these specific units, as they could reflect on the overall financial health and strategic direction of Best Western.