What was the amount of the goodwill impairment loss recognized by Clear Pest Pros in 2023?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
st of franchisee-related matters of noncompliance, adversely impacted expected future cash inflows as well.
During 2023, management determined that the carrying amount of the Company exceeded fair value, which was estimated based on the present value of expected future cash inflows. Accordingly, a goodwill impairment loss of $45,537 was recognized in 2023, which is included within operating expenses on the consolidated statement of operations. The impairment loss is attributable in part to deteriorating economic conditions impacting the Company, including rising interest rates and the overall cost of accessible debt necessary to fuel investment; furthermore, strategic shifts undertaken by management to improve the overall health of the business, including ongoing efforts to reduce the overall size of its franchise network in order to resolve a host of franchisee-related matters of noncompliance, adversely impacted expected future cash inflows as well. The remaining goodwil
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 67)
What This Means (2025 FDD)
According to Clear Pest Pros's 2025 Franchise Disclosure Document, the company recognized a goodwill impairment loss of $45,537 in 2023. This loss is included within operating expenses on the consolidated statement of operations.
The impairment loss was attributed to several factors. These include deteriorating economic conditions that impacted Clear Pest Pros, such as rising interest rates and the increasing cost of debt required for investment. Additionally, strategic shifts made by management to improve the business's overall health, including efforts to reduce the size of its franchise network to address franchisee noncompliance issues, negatively affected expected future cash inflows.
Goodwill impairment can significantly impact a company's profitability, as it directly reduces net income. For a prospective Clear Pest Pros franchisee, this indicates potential financial instability or challenges within the company. It is important to investigate the reasons behind the goodwill impairment and how Clear Pest Pros plans to address these issues to ensure the long-term viability of the franchise system.