What does the goodwill balance for Hardees primarily consist of as of January 31, 2024?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
ring fiscal 2024 and 2023, we capitalized interest costs in the amounts of $180 and $325, respectively.
NOTE 5 — ACQUISITIONS AND REFRANCHISING ACTIVITY
Acquisition of Restaurants
During the fiscal year ended January 31, 2024, we purchased nineteen Hardee's restaurants and one Carl's Jr. restaurant from franchisees for purchase price consideration of $3,342, which in combination with certain assets subject to pre-existing relations with these franchisees, results in aggregate consideration transferred for $3,438. As a result of these transactions, we recorded the following:
| Fi | scal 2024 | |
|---|---|---|
| Net working capital | $ | 55 |
| Property and equipment | 12,281 | |
| Operating lease assets | 5,048 | |
| Reacquired franchise rights | 1,810 | |
| Operating leases | (5,048) | |
| Finance leases | (10,708) | |
| Net assets acquired and liabilities assumed | $ | 3,438 |
The resulting acquisitions result in no goodwill. Legal, travel and other expens
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the company disposed of goodwill in connection with a refranchising transaction during fiscal year 2024. Specifically, Hardees sold one restaurant along with related inventory and fixed assets that had a net book value of $1,267. As part of this sale, Hardees disposed of $662 of allocated goodwill. The franchisee acquired the real property and equipment associated with the restaurant location as part of the refranchising transaction. Hardees received aggregate consideration of $2,082 from the sale and recognized a net gain of $153, which was included in facility action charges.
Additionally, the 2025 FDD states that the acquisitions made by Hardees resulted in no goodwill. The company performed annual impairment tests for goodwill and indefinite-lived intangible assets during the fourth quarter of fiscal years 2024 and 2025. These tests used a qualitative approach to determine whether the fair value of these assets was greater than their carrying value. The results of these tests indicated that no impairment losses were recorded in either fiscal year 2024 or 2025.
In summary, the goodwill balance for Hardees as of January 31, 2024, was affected by the disposal of goodwill related to a refranchising transaction, but no impairment losses were recorded. The FDD provides information on the financial activities that impacted goodwill during this period, offering insight into how Hardees manages its assets and financial performance.