What was the amount of impairment charges for assets to be disposed of (Level 2) for Hardees during fiscal year 2024?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
y not be meaningful indicators of our potential liability or financial exposure. We regularly review contingencies to determine the adequacy of our accruals and related disclosures. The ultimate amount of loss may differ from these estimates.
NOTE 15 — FRANCHISE OPERATIONS
Franchised restaurants and other revenue consisted of the following:
| Royalties | $ | 190,073 | $ | 182,255 |
|---|---|---|---|---|
| Rent and other occupancy | 100,611 | 105,248 | ||
| Franchise fees | 4,917 | 6,142 | ||
| Other | 4,353 | 9,029 | ||
| Total franchised restaurants and other revenue | $ | 299,954 | $ | 302,674 |
Franchised restaurants and other expense consisted of the following:
| Rent and other occupa
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the impairment charges for assets to be disposed of (Level 2) during fiscal year 2024 was $3,311.
Impairment charges typically arise when the carrying value of assets on a company's balance sheet exceeds their recoverable amount. This can happen due to various factors, such as a decline in market value, obsolescence, or adverse changes in business conditions. For Hardees, these charges reflect the reduction in value of assets that the company intends to sell or otherwise dispose of. The Level 2 designation indicates that the fair value of these assets was determined using observable market data.
For a prospective Hardees franchisee, understanding impairment charges is crucial because it provides insights into the financial health and asset management practices of the company. High impairment charges could signal potential issues with asset valuation or operational performance, which may impact the overall profitability and stability of the franchise system. Therefore, it is important for potential franchisees to carefully review Hardees's financial statements and assess the reasons behind any significant impairment charges before making an investment decision.
Facility action charges, as noted in the FDD, include impairment of restaurant-level long-lived assets for restaurants to be disposed of or held and used, store closure costs, and gain or loss on the sale of restaurants, including refranchising transactions. These charges are subject to management's judgment in estimating future cash flows, closure costs, sublease income, and refranchising proceeds, which could cause actual results to vary significantly from estimates.