Under what circumstances does Checkers assess definite-lived intangibles for impairment, besides the annual assessment?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
amount exceeds fair value, that amount represents the impairment loss to be recognized, up to the carrying amount of goodwill. Refer to Note 9 - Goodwill and Intangible Assets, Net for further information.
Definite-Lived Intangible Assets
Definite-lived intangible assets, principally franchise agreements are amortized on a straight-line basis over their estimated useful lives of 15 years (see Note 9 - Goodwill and Intangible Assets, Net). The Company assesses definite-live intangibles for impairment on an annual basis, or upon the existence of events or conditions which indicate that the asset may not be recoverable.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the company assesses definite-lived intangibles for impairment on an annual basis. However, Checkers will also perform an assessment should events or conditions arise that suggest the asset's value may not be recoverable.
In the event that such conditions arise, Checkers will perform an impairment assessment for its definite-lived assets, indefinite-lived intangible assets, lease ROU assets, and property and equipment. The 2025 FDD states that the Out-of-Court Restructuring was one such event that triggered an impairment assessment.
For a Checkers franchisee, this means that the value of their franchise agreement (a definite-lived intangible asset) could be re-evaluated if certain negative events occur that impact the overall financial health of the company. This could potentially lead to a write-down of the asset's value on Checkers's balance sheet.