Is Body Brain Center required to amortize goodwill?

According to Body Brain Center's 2025 Franchise Disclosure Document, goodwill is not amortized. The FDD states that goodwill represents the excess of the amount paid by the company over the book value of the assets purchased for a direct center. Instead of amortization, Body Brain Center tests goodwill for impairment at least annually.

To determine if goodwill is impaired, Body Brain Center performs a multi-step impairment test annually or more frequently if needed. The company may first assess qualitative factors to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value.

This accounting treatment means that instead of systematically reducing the value of goodwill over time through amortization, Body Brain Center assesses whether the fair value of the acquired assets has declined. If the fair value is less than the carrying value, an impairment loss is recognized. This approach can result in more volatile earnings, as impairment losses can be large and infrequent, compared to the steady expense of amortization. A prospective franchisee should understand how Body Brain Center accounts for goodwill, as it can affect the company's reported financial performance.