How often does Hardees test its trademarks/tradenames for impairment?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Our indefinite-lived intangible assets consist of trademarks / tradenames. We test trademarks / tradenames for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. We first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount. If we conclude that it is more likely than not that the indefinite-lived intangible asset is impaired, we then perform a quantitative test to determine whether the carrying amount is less than the fair value of the indefinite-lived intangible asset and measure the amount of impairment, if any.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, the company assesses its trademarks and tradenames for impairment at least annually. Hardees may conduct these tests more frequently if specific events or changes in circumstances suggest that the carrying amount of these intangible assets might not be recoverable.
The initial step in the impairment test involves a qualitative assessment to determine if it is more likely than not that the fair value of the trademark or tradename is less than its carrying amount. If this assessment indicates a potential impairment, Hardees then performs a quantitative test. This quantitative test compares the carrying amount to the fair value of the intangible asset to measure the amount of impairment, if any.
For a prospective Hardees franchisee, this means that the value of the Hardees brand name and associated trademarks is regularly evaluated by the company. These evaluations can affect the overall financial health and reporting of the company. The consistent monitoring of these assets suggests that Hardees is actively managing and protecting its brand value, which is a critical component of the franchise system's success.