How are Monicals Pizza's right-of-use assets assessed for impairment?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Right-of-use assets are assessed for impairment in accordance with the Company's long-lived asset policy. The Company reassesses lease classification and remeasures right-of-use assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, the company assesses right-of-use assets for impairment based on its long-lived asset policy. Additionally, Monicals Pizza reassesses lease classification and remeasures right-of-use assets and lease liabilities when a lease is modified, provided the modification isn't accounted for as a separate new lease, or upon certain other events that necessitate reassessment.
For a prospective franchisee, this means that the value of assets like leased property or equipment can be adjusted downwards (impaired) if their value decreases. This could happen due to market changes, damage, or other factors. The policy ensures that the financial statements accurately reflect the true value of these assets.
Furthermore, any changes to the lease agreement could trigger a reevaluation of these assets and liabilities. It is important for franchisees to understand the company's long-lived asset policy and how it may impact their financial reporting and asset valuation. Franchisees should consult with Monicals Pizza and their own financial advisors to fully understand the implications of this policy.