What brands, besides Burger King, are considered indefinite-lived intangible assets and tested for impairment?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in connection with business combination transactions. Our indefinite-lived intangible assets consist of the Tim Hortons brand, the Burger King brand, the Popeyes brand and the Firehouse Subs brand (each a "Brand" and together, the "Brands"). Goodwill and the Brands are tested for impairment at least annually as of October 1 of each year and more often if an event occurs or circumstances change which indicate that impairment might exist. Our annual impairment tests of goodwill and the Brands may be completed through qualitative assessments. We may elect to bypass the qualitative assessment and proceed directly to a quantitative impairment test for any reporting unit or Brand in any period. We can resume the qualitative assessment for any reporting unit or Brand in any subsequent period.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 109–124)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, several brands, in addition to Burger King, are considered indefinite-lived intangible assets. These brands include Tim Hortons, Popeyes, and Firehouse Subs. These brands, along with Burger King, are tested for impairment at least annually, specifically as of October 1st of each year.
These impairment tests are conducted to assess the fair value of each brand. The tests may be performed more frequently if certain events occur or if circumstances change that suggest an impairment might exist. The annual impairment tests can be completed through qualitative assessments, but Burger King has the option to bypass this qualitative assessment and proceed directly to a quantitative impairment test for any brand in any period. Furthermore, Burger King can resume the qualitative assessment for any brand in subsequent periods.
For a prospective Burger King franchisee, this information is relevant because it provides insight into how the company values its brands and manages its assets. The impairment testing process ensures that the company's financial statements accurately reflect the value of its intangible assets. This can impact the overall financial health and stability of the company, which in turn can affect the franchisee's investment and business operations. Understanding these financial practices can help a franchisee make informed decisions about their investment in the Burger King franchise.