What was the amount of fair value remeasurements for Brueggers Bagels?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
iness. From the comparable public companies, a representative market value multiple is determined and then applied to the Company's financial metrics.
Nonrecurring Fair Value Measurements
Certain nonfinancial assets, primarily property, plant, and equipment, right of use assets, goodwill and intangible assets, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, these assets are required to be assessed for impairment whenever events or circumstances indicate that their carrying value may not be fully recoverable, and at least annually for goodwill and indefinite-lived intangible assets. In the event an impairment is required, the asset is adjusted to fair value, using market-based assumptions.
The fair value of non-financial assets measured at fair value on a non-recurring basis, which is classified as Level 3 in the fair value hierarchy, is determined based on appraisals or sales prices of comparable assets and estimates of future cash flows.
As of December 31, 2024, long-lived assets held and used with a carrying amount of $0.7 million associated with distinct underperforming Company-owned coffeehouses and bagel bakeries and Company-owned coffeehouses and bagel bakeries were determined to have a fair value of $0.5 million, resulting in an impairment loss of $0.2 million.
As of December 26, 2023, long-lived assets held and used with a carrying amount of $0.9 million associated with distinct underperforming Company-owned coffeehouses and bagel bakeries were determined to have a fair value of $0.7 million, resulting in an impairment loss of $0.2 million.
As of December 27, 2022, long-lived assets held and used with a carrying amount of $9.0 million
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, the company assesses the fair value of assets on a non-recurring basis, adjusting them when their carrying value may not be fully recoverable. This process is particularly applied to property, plant, and equipment, right of use assets, goodwill, and intangible assets. These non-financial assets are classified as Level 3 in the fair value hierarchy and are evaluated based on appraisals, sales prices of comparable assets, and estimates of future cash flows.
Specifically, as of December 31, 2024, long-lived assets held and used, with a carrying amount of $0.7 million, were determined to have a fair value of $0.5 million, resulting in an impairment loss of $0.2 million. Similarly, as of December 26, 2023, assets with a carrying amount of $0.9 million had a fair value of $0.7 million, also resulting in an impairment loss of $0.2 million. The most significant adjustment occurred as of December 27, 2022, when assets carried at $9.0 million were remeasured to a fair value of $6.1 million, leading to an impairment loss of $2.9 million.
These remeasurements and resulting impairment losses reflect adjustments made to the value of underperforming company-owned coffeehouses and bagel bakeries. For a prospective franchisee, this indicates that Brueggers Bagels actively monitors the performance and value of its assets, and is willing to recognize losses when assets are not performing up to expectations. This may also reflect the risk of operating underperforming locations, which could potentially impact the overall financial health of the company.