How often does Checkers test intangible assets with an indefinite life for impairment?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company assesses the impairment of indefinite-lived intangible assets, which consist of brand name intangibles, on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The annual impairment assessment is performed on the first day of the Company's fourth fiscal quarter. When evaluating potential impairment indicators, we consider the following:
- Significant under-performance relative to expected and/or historical results (negative same store sales growth or operating cash flows)
- Significant industry or economic trends that could have a negative impact on our business
The impairment evaluation typically involves utilizing market conditions and future discounted cash flows, which are based on forecasted operating results. If it is determined that the estimated fair value of the intangible asset is less than its carrying value, we record an impairment loss to adjust the asset carrying value to fair value.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the company assesses the impairment of indefinite-lived intangible assets, which include brand name intangibles, on an annual basis. The annual impairment assessment is performed on the first day of the company's fourth fiscal quarter. In addition to the annual assessment, Checkers also evaluates these assets whenever events or changes in circumstances suggest that the carrying value of the assets may not be recoverable.
When evaluating potential impairment indicators, Checkers considers factors such as significant under-performance relative to expected or historical results, including negative same-store sales growth or operating cash flows, and significant industry or economic trends that could negatively impact the business.
The impairment evaluation typically involves utilizing market conditions and future discounted cash flows, which are based on forecasted operating results. If the estimated fair value of the intangible asset is determined to be less than its carrying value, Checkers records an impairment loss to adjust the asset's carrying value to its fair value.