What conditions trigger Carbones Pizzeria to recognize an impairment in the carrying value of an asset?

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 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 franchisee, this accounting practice indicates that Carbones Pizzeria regularly assesses the value of its assets and adjusts its financial statements to reflect any declines in value. This is a standard accounting practice and provides transparency in the company's financial reporting. Franchisees may want to inquire about the specific methods and assumptions used to determine the fair value of assets, as these can impact the company's financial performance and, potentially, the franchisee's investment.