Are intangible assets and goodwill capitalized by Bhc?

According to Bhc's 2025 Franchise Disclosure Document, the company capitalizes long-lived intangible assets, including trademarks and goodwill. Goodwill, as defined in the document, represents the excess of cost over the fair value of net identified assets acquired through business acquisitions. Bhc has elected an alternative accounting method that involves goodwill amortization alongside impairment tests, which are conducted as deemed necessary and appropriate by the company. Trademarks are considered to have an indefinite life, and their impairment is reviewed alongside other long-lived assets.

Bhc reviews its long-lived assets for impairment on a periodic basis, at least annually, and whenever events or changes in circumstances suggest that the carrying amount of these assets may not be recoverable. This process is crucial for ensuring that the value of the assets reported on the company's balance sheet accurately reflects their current worth. If an asset's carrying amount is deemed unrecoverable, Bhc will recognize an impairment loss to reduce the asset's value to its fair market value.

For a prospective franchisee, this accounting practice indicates that Bhc recognizes and accounts for the value of its brand and acquired assets. The franchisee should be aware that while Bhc capitalizes and amortizes goodwill, the franchisee themselves explicitly agrees that no monetary amount will be assigned as attributable to any goodwill associated with the franchisee's use of the Bhc system, marks, or intellectual property. This distinction highlights that the goodwill generated through the franchisee's operations accrues solely to the benefit of Bhc.