How often does Clear Pest Pros assess goodwill for impairment?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
l lives of the assets. Costs of maintenance and repairs are charged to expense when incurred.
Goodwill
The recorded amounts of goodwill from prior business combinations are based on management's best estimates of the fair values of assets acquired and liabilities assumed at the date of acquisition. Goodwill is not amortized but rather is assessed at least on an annual basis for impairment.
During 2024, 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 $10,519 was recognized in 2024, 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 and elimination of the TruckMount manufacturing; 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 h
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 67)
What This Means (2025 FDD)
According to Clear Pest Pros's 2025 Franchise Disclosure Document, goodwill is not amortized but is assessed for impairment at least annually. In 2024, Clear Pest Pros recognized a goodwill impairment loss of $10,519 due to deteriorating economic conditions and strategic shifts, including reducing the franchise network size to address franchisee noncompliance.
In 2023, Clear Pest Pros also recognized a goodwill impairment loss of $45,537, which was attributed to similar economic factors such as rising interest rates and the cost of debt, as well as ongoing efforts to reduce the franchise network size. However, the remaining goodwill was determined not to be impaired at that time.
These impairment losses indicate that Clear Pest Pros has faced challenges in maintaining the value of its acquired goodwill, which can be influenced by various factors, including economic conditions and strategic decisions. Prospective franchisees should be aware of these potential risks and consider how such factors could impact the overall financial performance of the franchise system.