Under what circumstances does Checkersrallys assess definite-lived intangibles for impairment?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Definite-lived intangible assets, principally franchise agreements are amortized on a straight-line basis over their estimated useful lives of 15 years (see Note 11. 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 Checkersrallys's 2025 Franchise Disclosure Document, the company assesses definite-lived intangibles for impairment on an annual basis. These assets, primarily franchise agreements, are amortized using the straight-line method over their estimated useful lives of 15 years.
In addition to the annual assessment, Checkersrallys will also evaluate definite-lived intangibles for impairment whenever events or conditions suggest that the asset may not be recoverable. This means that if there are significant changes or circumstances that indicate the value of the franchise agreement has declined, Checkersrallys will conduct an impairment assessment to determine if the asset's carrying value needs to be adjusted.
For a prospective Checkersrallys franchisee, this indicates that the value of their franchise agreement is regularly reviewed by the company. While the standard amortization period is 15 years, unforeseen circumstances could lead to an earlier impairment assessment. It is important for franchisees to understand the factors that could trigger such an assessment and how it might affect the financial statements of the franchise.