What valuation methodologies does Carvel use to estimate fair value when assessing goodwill and intangible assets?

According to Carvel's 2025 Franchise Disclosure Document, the company estimates fair value for goodwill, tradenames, and intangible assets using multiple valuation methodologies, including discounted cash flow models. These assets are evaluated for impairment annually or more frequently if circumstances indicate potential impairment. This evaluation can be qualitative or quantitative. If a qualitative assessment shows that the fair value of a reporting unit's net assets or tradename more likely than not exceeds its carrying value, no further evaluation is needed.

However, if a quantitative assessment is performed, Carvel compares the fair value of the reporting unit or tradename to its carrying value. If the fair value exceeds the carrying value, the goodwill or tradename is not impaired. Conversely, if the carrying value exceeds the fair value, Carvel records an impairment charge for the difference.

The operating assumptions used in Carvel's discounted cash flow models are generally consistent with past performance and the projections and assumptions used in the company's current operating plan. These assumptions are subject to change due to evolving economic and competitive conditions. No impairment losses were recorded for goodwill, tradenames, or amortizable intangible assets during the fiscal years ended December 29, 2024 and December 31, 2023.