What was the reported amortization of intangible assets for Black Bear Diner in 2022?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
and December 28, 2022 was $86,353 and $70,347, respectively.
NOTE 3 - INTANGIBLE ASSETS AND GOODWILL
Intangible assets consist of the following:
| Life | December 27, | December 28, | |
|---|---|---|---|
| in Years | 2023 | 2022 | |
| Intangible assets subject to amortization: | |||
| Trade name | 20 | $ 35,100,000 |
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, the amortization expense on intangible assets subject to amortization was $2,988,404 for the year ended December 28, 2022. This figure reflects the expense recognized by Black Bear Diner for the decrease in value of its intangible assets, such as trademarks, licenses, and goodwill, over that year. A portion of this amortization expense, specifically $360,799, is related to a trademark license agreement with a related party.
For a prospective franchisee, understanding the amortization expense is crucial as it provides insight into how Black Bear Diner accounts for its intangible assets. Amortization is a non-cash expense, meaning it doesn't involve an actual outflow of cash, but it does reduce the company's reported profit. The fact that a significant portion of the amortization expense relates to a related-party trademark license agreement suggests that Black Bear Diner has a specific arrangement for the use of its trademarks by affiliated entities.
It's important to note that the reported amortization expense is based on estimates made by the management of Black Bear Diner, as stated in the Use of Estimates section. These estimates affect the carrying value of long-lived assets and the valuation of intangible assets and goodwill. Actual results could differ significantly from these estimates, which could impact the financial performance of Black Bear Diner and, by extension, its franchisees. Franchisees should consider these accounting practices and estimates when evaluating the financial health and stability of the Black Bear Diner franchise system.
Prospective franchisees may want to inquire further about the nature of these intangible assets, the methods used to determine their useful lives and amortization schedules, and the specifics of the related-party trademark license agreement. Understanding these details can provide a more comprehensive view of the financial structure and potential risks associated with investing in a Black Bear Diner franchise.