What are some examples of significant industry or economic trends that Checkersrallys believes could negatively impact their business?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company assesses the impairment of indefinite-lived intangible assets, which consist of tradename intangibles, on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When evaluating potential impairment indicators, the Company considers qualitative factors such as significant industry or economic trends that could negatively affect the Company's business. If that assessment demonstrates that it is more likely than not that an impairment does not exist, no further testing is required. If impairment is deemed to be more likely than not, a quantitative test is required that compares the fair value of the Company with its carrying amount. If the carrying amount exceeds fair value, that amount represents the impairment loss to be recognized.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, when evaluating potential impairment indicators for indefinite-lived intangible assets, the company considers qualitative factors such as significant industry or economic trends that could negatively affect Checkersrallys's business.
This means that Checkersrallys acknowledges that external factors in the broader industry and economy can pose risks to its financial performance. These trends are considered when assessing the value of intangible assets like brand names. If these trends are deemed likely to cause impairment (a reduction in the asset's value), Checkersrallys will conduct further testing to quantify the potential loss.
For a prospective franchisee, this highlights the importance of understanding the broader economic and industry landscape. Factors like changing consumer preferences, increased competition, economic downturns, or rising costs of goods could all impact the profitability of a Checkersrallys franchise. It would be prudent for a potential franchisee to research these trends and assess their potential impact on their investment.