What was the goodwill impairment loss recognized by Cool Binz in 2022, and what event triggered it?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
verall 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 goodwill was determined not to be impaired, as the carrying value of the remaining company exceeded the fair value.
During 2022, Delta ceased operations, and, as a result, management determined that the carrying amount of Delta exceeded fair value, which was estimated based on the present value of expected future cash inflows.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, the company recognized a goodwill impairment loss of $1,266 in 2022. This loss was specifically related to Delta ceasing operations. Goodwill impairment occurs when the carrying amount of an asset (in this case, the Delta operations) exceeds its fair value, indicating a decline in its value.
In addition to the goodwill impairment loss, Cool Binz also recognized impairment losses related to the Delta trade name and franchise agreements in 2022. These losses amounted to $787 and $4,165, respectively. These impairments, along with the goodwill impairment, are included within operating expenses on the consolidated statement of operations.
For a prospective franchisee, these impairment losses indicate potential financial challenges or strategic shifts within Cool Binz. The closure of Delta and the subsequent impairments suggest that Cool Binz may have faced difficulties with this particular operation, leading to its cessation and the devaluation of related assets. It is important to note that these figures are from 2022, and the company's financial situation may have changed since then. Reviewing more recent financial statements and asking the franchisor about the current financial health and strategic direction of the company is advisable.