What valuation methodologies does Cinnabon use to estimate fair value when assessing goodwill and intangible assets?

According to Cinnabon's 2025 Franchise Disclosure Document, the company estimates fair value for goodwill and intangible assets using multiple valuation methodologies, including discounted cash flow models. These models rely on operating assumptions that are generally consistent with Cinnabon's past performance and the projections and assumptions used in its current operating plan. These assumptions are subject to change due to shifting economic and competitive conditions.

For a prospective Cinnabon franchisee, this means that the company's assessment of its intangible assets, such as the brand's tradename and goodwill, is based on financial models that take into account both historical performance and future expectations. The use of discounted cash flow models is a common practice in business valuation, as it attempts to determine the present value of expected future cash flows.

However, it's important to note that the assumptions used in these models are subject to change, which could impact the valuation of Cinnabon's intangible assets. Factors like economic downturns or increased competition could lead to a reassessment of these assets and potentially result in impairment charges. While no impairment losses were recorded for goodwill, tradenames, or amortizable intangible assets during the fiscal years ended December 29, 2024 and December 31, 2023, this could change in the future. A potential franchisee should consider these factors and the overall economic climate when evaluating the franchise opportunity.