What was the impairment loss on acquired franchise agreements for Boulder Designs in 2022?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
ent assets by $951,771 and $824,556, respectively. Management of the Company has taken initiative to efficiently manage the business, as well as increase liquidity and financial flexibility in order to mitigate the negative operating results. The Company has implemented certain cost reduction plans and is analyzing its sources for sales leads to take a more strategic ap
Source: Item 23 — RECEIPT (FDD pages 50–217)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, the impairment loss on acquired franchise agreements was $30,000 in 2022. This figure reflects the accounting treatment for the decrease in value of franchise rights that Boulder Designs repurchased with the intention of reselling them.
An impairment loss typically occurs when the fair value of an asset declines below its carrying value on the balance sheet. In this case, Boulder Designs recognized that the value of certain reacquired franchise agreements had diminished, leading to this loss. This can happen for various reasons, such as changes in market conditions, poor performance of the repurchased franchises, or other factors affecting their resale potential.
For a prospective Boulder Designs franchisee, this information provides insight into the company's financial management and its handling of reacquired franchises. The consistent impairment loss of $30,000 in 2022 and 2023, and $28,000 in 2024 suggests that Boulder Designs regularly deals with reacquired franchises that do not perform as expected, resulting in a write-down of their value. This could be a point of due diligence for potential franchisees to understand the reasons behind these repurchases and the strategies Boulder Designs employs to mitigate such losses.