When does Burger King test its brand and goodwill for impairment annually?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
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, the company tests its brand and goodwill for impairment at least annually. Specifically, these tests are conducted as of October 1st of each year. However, Burger King may perform these tests more frequently if events occur or circumstances change that suggest impairment might exist.
The annual impairment tests can be completed through qualitative assessments, but Burger King has the option to bypass the qualitative assessment and proceed directly to a quantitative impairment test for any reporting unit or brand in any period. Furthermore, Burger King can resume the qualitative assessment for any reporting unit or brand in any subsequent period.
For a prospective franchisee, this indicates that Burger King regularly evaluates the value of its brand and goodwill, which are significant assets. These tests help ensure that the company's financial statements accurately reflect the value of these assets. The fact that Burger King can choose between qualitative and quantitative assessments provides flexibility in how they conduct these tests, potentially reducing the burden of testing while still maintaining accuracy. The results of these tests can impact the company's financial performance and, indirectly, the value of a Burger King franchise.