What conditions trigger the recognition of impairment in the carrying value of an asset for Carbones Pizzeria?

According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the company evaluates the net realizable value of its long-lived assets, which include property, equipment, and intangible assets. This evaluation relies on several factors, such as operating results, business plans, economic projections, and anticipated future cash flows.

Specifically, Carbones Pizzeria recognizes an impairment in the carrying value of an asset when the fair value of that asset falls below its carrying value. This means that if the market value of an asset (what it could be sold for) is less than the value at which it is recorded on the company's books, an impairment is recognized.

For a prospective Carbones Pizzeria franchisee, this accounting policy is important because it affects the company's reported financial performance. If the company has to write down the value of its assets due to impairment, it could negatively impact its profitability and overall financial health. Franchisees should be aware of how the franchisor manages and values its assets, as this can provide insights into the company's financial stability and future prospects.