When does Budget perform its annual impairment assessment?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
We do not amortize goodwill, but assess it for impairment at least annually and whenever events or changes in circumstances indicate that the carrying amounts of their respective reporting units exceed their fair values. We perform our annual impairment assessment in the fourth quarter of each year at the reporting unit level. We assess goodwill for such impairment by comparing the carrying value of each reporting unit to its fair value using the present value of expected future cash flows. When appropriate, comparative market multiples and other factors are used to corroborate the discounted cash flow results.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the company assesses goodwill for impairment at least annually. This assessment is conducted in the fourth quarter of each year, specifically at the reporting unit level.
Budget assesses goodwill for impairment by comparing the carrying value of each reporting unit to its fair value. This valuation is determined using the present value of expected future cash flows. To ensure accuracy, Budget also uses comparative market multiples and other relevant factors to corroborate the discounted cash flow results.
For a prospective Budget franchisee, this means that the franchisor regularly evaluates the financial health of its various units and the overall brand. The annual impairment assessment in the fourth quarter helps Budget identify and address any potential declines in value, which could impact the financial stability and strategic decisions of the company.