What does goodwill represent for Corcoran, according to the FDD?
Corcoran Franchise · 2025 FDDAnswer from 2025 FDD Document
Operations, is computed utilizing the straight-line method over the estimated useful lives of the related assets. Amortization of leasehold improvements, also recorded as a component of depreciation and amortization, is computed utilizing the straight-line method over the estimated benefit period of the related assets or the lease term, if shorter. Useful lives are 30 years for buildings, up to 20 years for leasehold improvements, and from 3 to 7 years for furniture, fixtures and equipment.
The Company capitalizes the costs of software developed for internal use which commences during the development phase of the project. The Company amortizes software developed or obtained for internal use on a straight-line basis, generally from 1 to 5 years, when such software is ready for use. The net carrying value of software developed or obtained for internal use was $127 million and $134 million at December 31, 2024 and 2023, respectively.
LEASES
See Note 6, "Leases", for discussion.
IMPAIRMENT OF GOODWILL, INTANGIBLE ASSETS AND OTHER LONG-LIVED ASSETS
Goodwill represents the excess of acquisition costs over the fair value of the net tangible assets and identifiable intangible assets acquired in a business combination. Other indefinite-lived intangible assets primarily consist of trademarks acquired in business combinations. Goodwill and other indefinite-lived assets are not amortized but are subject to impairment testing. The aggregate carrying values of our goodwill and other indefinite-lived intangible assets were $2,499 million and $614 million, respectively, at December 31, 2024 and are subject to an impairment as
Source: Item 23 — RECEIPTS (FDD pages 75–276)
What This Means (2025 FDD)
According to Corcoran's 2025 Franchise Disclosure Document, goodwill represents the excess of acquisition costs over the fair value of the net tangible assets and identifiable intangible assets acquired when Corcoran engages in a business combination. Goodwill and other indefinite-lived assets are not amortized but are subject to impairment testing. The aggregate carrying values of goodwill and other indefinite-lived intangible assets were $2,499 million and $614 million, respectively, at December 31, 2024. These values are subject to an impairment assessment annually as of October 1, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable.
To test goodwill for impairment, Corcoran estimates the fair value of each reporting unit using the income approach, specifically a discounted cash flow method. For other indefinite-lived intangible assets, the fair value is estimated using the relief from royalty method. These estimations involve long-term cash flow forecasts and the company's annual operating plans, adjusted for terminal value assumptions. The fair value determination considers future revenues, operating expenses (including commission expense), market and general economic conditions, industry trends, and assumptions that management believes marketplace participants would utilize, such as discount rates, cost of capital, trademark royalty rates, and long-term growth rates. The trademark royalty rate is determined by reviewing similar trademark agreements with third parties.
For a prospective Corcoran franchisee, understanding how Corcoran values and assesses goodwill can provide insight into the financial health and stability of the franchisor. The impairment testing and valuation methods used by Corcoran reflect the brand's approach to managing its intangible assets and ensuring their long-term value. This information can be useful for franchisees in assessing the overall strength and market position of the Corcoran brand.