At what level does Noodles & Company management group and evaluate long-lived assets for impairment?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company evaluates its long-lived assets for impairment whenever events or changes indicate that the carrying amount of an asset may not be recoverable. Management groups and evaluates long-lived assets for impairment at the individual restaurant level, which is the lowest level at which independent identifiable cash flows are available. The Company estimates the future undiscounted cash flows expected to be generated by the assets and compares those estimates to the carrying value of the related assets. If the assets are determined to be impaired, they are written down to their fair values.
Source: Item 22 — CONTRACTS (FDD pages 98–99)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, the company groups and evaluates long-lived assets for impairment at the individual restaurant level. This is the lowest level at which independent identifiable cash flows are available.
Noodles & Company assesses long-lived assets for impairment whenever events or changes suggest that the carrying amount of an asset may not be recoverable. To determine this, the company estimates the future undiscounted cash flows expected to be generated by the assets and compares these estimates to the carrying value of the related assets. If the assets are deemed to be impaired, they are written down to their fair values.
For a prospective franchisee, this means that the financial performance of their specific Noodles & Company restaurant will be closely monitored to ensure the assets are not impaired. If a restaurant underperforms, Noodles & Company may write down the value of its assets, which could impact the franchisee's financial statements and the overall valuation of the business. It is important for franchisees to understand how Noodles & Company assesses impairment and what factors could trigger a write-down of assets.