What is the net carrying amount for Carls' trademarks/tradenames?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
l 2024, CKE Restaurants sold one Hardee's restaurant and certain related inventory and fixed assets with a net book value of $1,265. In connection with the sale of this restaurant, we received aggregate consideration of $2,082, and recognized a net gain of $817, which is included in facility action charges, net, in our accompanying Combined Consolidated Statements of Income. In connection with the refranchising transaction, the franchisee acquired real property and equipment related to the restaurant location.
NOTE 6 — INTANGIBLE ASSETS, NET
The table below presents our intangible assets as of January 31, 2024 and 2023:
| | | 2024
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls' 2024 Franchise Disclosure Document, the net carrying amount for trademarks and tradenames is $614,400. The trademarks/tradenames have an indefinite weighted average life. The gross carrying amount is $614,400, with no accumulated amortization.
For a prospective franchisee, this indicates the value Carls places on its brand recognition and intellectual property. Because the trademarks/tradenames have an indefinite life, Carls does not amortize these assets. Instead, they are tested for impairment.
This valuation can be relevant to a franchisee as it reflects the strength and recognition of the Carls brand, which can influence customer traffic and sales. It's important to note that while the net carrying amount remains constant due to the indefinite life and lack of amortization, the actual value and strength of the trademarks/tradenames can fluctuate based on market conditions and brand performance.