When does Closet Storage Concepts test intangible assets for impairment at least annually?

According to Closet Storage Concepts's 2025 Franchise Disclosure Document, the company tests its intangible assets for impairment at least annually on December 31. However, Closet Storage Concepts may test more frequently if events or changes in circumstances indicate that the carrying value of an asset might be impaired. Such circumstances include a significant decline in sales, earnings, or cash flows, or material adverse changes in the business climate.

The intangible assets primarily relate to the acquisition of certain franchise costs and restrictive covenants dating back to October 31, 2013. As of December 31, 2024, there has been no impairment loss related to these intangible assets. The estimated future amortization expense for the years 2025 through 2027 is $30,000 per year, with $16,667 in 2028.

For a prospective franchisee, this means that Closet Storage Concepts periodically assesses the value of its intangible assets, such as franchise costs and agreements, to ensure they are accurately reflected in the company's financial statements. This process helps to provide a realistic view of the company's financial health. The consistent amortization expense suggests a stable valuation of these assets, which could be reassuring for potential investors.