How often does Checkersrallys test its brands (tradenames) intangible assets for impairment?
Checkersrallys 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 Checkersrallys's 2025 Franchise Disclosure Document, the company assesses the impairment of indefinite-lived intangible assets, which include brand name intangibles, on an annual basis. In addition to the annual assessment, Checkersrallys also performs impairment tests whenever events or changes in circumstances suggest that the carrying value of these assets may not be recoverable. This dual approach ensures that the value of these intangible assets is regularly reviewed and adjusted as needed.
The annual impairment assessment for Checkersrallys is conducted on the first day of the company's fourth fiscal quarter. During these evaluations, Checkersrallys considers factors such as significant under-performance relative to expected or historical results, like negative same-store sales growth or operating cash flows, and significant industry or economic trends that could negatively impact the business. These factors help Checkersrallys determine if a more detailed quantitative test is necessary.
The impairment evaluation process typically involves analyzing market conditions and future discounted cash flows, which are based on forecasted operating results. If the estimated fair value of an intangible asset is found to be less than its carrying value, Checkersrallys will record an impairment loss to adjust the asset's carrying value to its fair value. This ensures that the company's financial statements accurately reflect the value of its intangible assets.