How often does Cinnabon evaluate its tradenames for impairment?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
Intangible assets consist primarily of tradenames and franchise agreements. The Company does not amortize tradenames. Tradenames for each of the Franchising Entities are evaluated for impairment using a qualitative or quantitative assessment annually at year-end, or more frequently when circumstances arise indicating potential impairment. If a qualitative assessment is performed and the fair value of a tradename more likely than not exceeds the carrying value of the tradename, no further evaluation is necessary. If a quantitative assessment is performed and the fair value of a tradename exceeds the carrying value of the tradename, the tradename is not impaired. If the carrying value of the tradename exceeds the fair value of the tradename, an impairment charge is recorded for the difference.
The Company estimates fair value using multiple valuation methodologies, including discounted cash flow models. The operating assumptions used in the discounted cash flow models are generally consistent with past performance and with the projections and assumptions that are used in the current operating plan. Such assumptions are subject to change as a result of changing economic and competitive conditions.
No impairment losses were recorded for intangible assets during the fiscal years ended December 29, 2024, December 31, 2023, and December 25, 2022.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, the company evaluates its tradenames for impairment annually at year-end using either a qualitative or quantitative assessment. However, if circumstances arise that indicate a potential impairment, Cinnabon may evaluate the tradenames more frequently.
If Cinnabon performs a qualitative assessment and determines that the fair value of a tradename is likely higher than its carrying value, no further evaluation is needed. Conversely, if a quantitative assessment shows that the fair value exceeds the carrying value, the tradename is not considered impaired. However, if the carrying value of the tradename is higher than its fair value, Cinnabon will record an impairment charge for the difference.
The company uses various valuation methods to estimate fair value, including discounted cash flow models. The operating assumptions used in these models are generally based on past performance and current operating plans, but they can change due to economic and competitive conditions. The FDD states that no impairment losses were recorded for intangible assets during the fiscal years ended December 29, 2024, December 31, 2023, and December 25, 2022.