Under what circumstances does Brain Balance review intangible assets related to website and software development for potential impairment?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
Acquired intangible assets subject to amortization are stated at cost and are amortized using the straightline method over the estimated useful lives of the assets. Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable.
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, the company reviews intangible assets, specifically those related to website and software development, for potential impairment whenever events or circumstances suggest that the recorded values of these assets may not be recoverable. This means that Brain Balance assesses whether the carrying amount of these assets on their balance sheet is higher than the amount they expect to recover through future use or sale.
This accounting practice is important for franchisees because it can affect the financial health of Brain Balance, which in turn could impact the support and services they receive. If Brain Balance determines that an impairment has occurred, they would write down the value of the asset, which could affect their profitability and potentially their ability to invest in new technologies or marketing initiatives that benefit franchisees.
For a prospective franchisee, understanding this policy is crucial for assessing the long-term viability of the franchise system. It's advisable to inquire about the specific events or circumstances that would trigger an impairment review and how frequently these reviews are conducted. Additionally, understanding the historical trends in website and software development asset values and any past impairments can provide valuable insights into the company's financial management and investment strategies.