On what date does Noodles & Company perform its annual goodwill impairment test?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired. Goodwill is not subject to amortization, but instead is tested for impairment at least annually (or more often, if necessary) as of the first day of the Company's fourth fiscal quarter.
Goodwill is evaluated at the level of the Company's single operating segment, which also represents the Company's only reporting unit. In 2024, 2023 and 2022, the Company performed a qualitative impairment assessment. Under this approach, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If after performing the qualitative assessment, the Company determines there is less than a 50 percent chance that the fair value of its reporting unit is less than its carrying amount, then performing the two-step test is unnecessary. Based on the qualitative assessment performed, management did not believe that it is more likely than not that the Company's goodwill has been impaired.
Source: Item 22 — CONTRACTS (FDD pages 98–99)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, Noodles & Company tests for goodwill impairment at least annually, or more often if necessary, as of the first day of the company's fourth fiscal quarter.
For a prospective franchisee, this means that Noodles & Company assesses the value of its goodwill, which represents the excess of the purchase price over the fair value of identifiable net assets acquired, at the start of its fourth fiscal quarter each year. This evaluation helps determine if the recorded value of goodwill on the company's balance sheet is still accurate.
The FDD states that in 2024, 2023 and 2022, Noodles & Company performed a qualitative impairment assessment to determine whether it was more likely than not that the fair value of its reporting unit was less than its carrying amount. Based on these assessments, management did not believe that it was more likely than not that the company's goodwill had been impaired, and no impairment charges were recognized in those years.