How does Surestay Hotel By Best Western amortize goodwill?
Surestay_Hotel_By_Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
| 51,343 | 53,874 | | | Total contract liabilities | $ 343,781 | $ 346,867 | The Company has elected the private-company alternative to amortize goodwill over 10 years. Amortization expense for goodwill was approximately $0.8 million and $0.8 million for the years ended November 30, 2024 and 2023, respectively, and is estimated to be approximately $0.8 million annually for fiscal years ended 2025 through 2028.
Acquired customers and developed technology are definite-life intangible assets, and as such, amortization expense is calculated using a method that most appropriately reflects expected cash flows from these assets with an amortization period, ranging from 7.5 years to 10 years, depending on the type of asset. Amortization expense for definite-life intangible assets was approximately $0.4 million and $0.4 million for the years ended November 30, 2024 and 2023, respectively, and is estimated to be approximately $0.4 million annually for fiscal years ended 2025 and 2026.
Trademarks and trade names are indefinite-life assets as there is no foreseeable limit to the cash flows generated by these assets. The Company has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of these acquired trademarks and trade names and therefore are considered to be indefinite-lived intangible assets that are not subject to amortization. Trademarks and trade names value resulting from
Source: Item 23 — Receipts (FDD pages 88–286)
What This Means (2025 FDD)
According to Surestay Hotel By Best Western's 2025 Franchise Disclosure Document, the company has elected to amortize goodwill over a period of 10 years, utilizing the private-company alternative. Goodwill amortization expense was approximately $0.8 million for both the fiscal years ended November 30, 2024, and November 30, 2023. The company estimates that the goodwill amortization expense will remain at approximately $0.8 million annually for the fiscal years ending 2025 through 2028.
In addition to goodwill, Surestay Hotel By Best Western also amortizes acquired customers and developed technology, which are considered definite-life intangible assets. The amortization method used for these assets is designed to reflect the expected cash flows, with amortization periods ranging from 7.5 years to 10 years, depending on the asset type. The amortization expense for these definite-life intangible assets was approximately $0.4 million for the years ended November 30, 2024, and 2023, and is estimated to remain approximately $0.4 million annually for the fiscal years ending 2025 and 2026.
However, trademarks and trade names are treated differently. Surestay Hotel By Best Western considers these to be indefinite-life assets because there is no foreseeable limit to the cash flows they generate. As a result, these assets are not subject to amortization. The value of trademarks and trade names resulting from the WorldHotels acquisition was $1.3 million as of November 30, 2024, and 2023. This accounting approach reflects the company's view that these brands will continue to provide value indefinitely.