What gain did Bft recognize on the divestiture of the Stride brand?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
surements. ASC 820 establishes a valuation hierarchy for disclosures of the inputs to valuations used to measure fair value.
Notes to Consolidated Financial Statements (amounts in thousands)
This hierarchy prioritizes the inputs into three broad levels as follows:
Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.
Level 2 – Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates and yield curves), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 – Unobservable inputs that reflect assumptions about what market participants would use in pricing the asset or liability. These inputs would be based on the best information available, including the Company's own data.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the company divested the Stride brand on February 13, 2024. This divestiture included the intellectual property, franchise rights, and franchise agreements for open studios. The buyer was a former member of management and shareholder of the Member's parent. Bft did not receive any consideration from the divestiture. However, Bft recognized a gain of $323, which was included within selling, general, and administrative expenses in the consolidated statements of operations. Bft also agreed to assist the buyer with transition support, including cash payments of approximately $265 over the 12-month period following the divestiture.
For a prospective Bft franchisee, this information provides insight into Bft's strategic decisions regarding its brand portfolio. The divestiture of the Stride brand suggests that Bft is actively managing its resources and focusing on its core brands. The fact that Bft recognized a gain on the divestiture, despite receiving no direct consideration, indicates that the Stride brand had some inherent value.
However, the transition support payments of $265 suggest that Bft may have had some ongoing obligations or commitments related to the Stride brand. It's important to note that the divestiture did not represent a strategic shift that had a major effect on Bft's operations and financial results, meaning it was not presented as discontinued operations. This suggests that the Stride brand was not a significant part of Bft's overall business. A potential franchisee might want to inquire about the reasons for divesting the Stride brand and how this decision might impact Bft's future strategies and resource allocation.