What was the amount of impairment charges The Standardx recognized related to management and franchise agreement intangibles during the year ended December 31, 2024, and what was the primary reason for these charges?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
During the years ended December 31, 2024, December 31, 2023, and December 31, 2022, we recognized $8 million, $17 million, and $21 million, respectively, of impairment charges related to brand intangibles, as we determined that the carrying values of certain assets were in excess of the fair values, and $16 million, $12 million, and $10 million, respectively, of impairment charges related to management and franchise agreement intangibles, primarily as a result of contract terminations. The impairment charges were recognized in asset impairments on our consolidated statements of income, primarily within our management and franchising segment. The judgments and assumptions used in determining the impairment charges are classified as Level Three in the fair value hierarchy.
For additional information about acquisition and disposition activity impacting goodwill and intangibles, see Note 7.
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, during the year ended December 31, 2024, The Standardx recognized $16 million in impairment charges related to management and franchise agreement intangibles. The primary reason for these charges was contract terminations.
These impairment charges were recorded as asset impairments on The Standardx's consolidated statements of income, predominantly within the management and franchising segment. The judgments and assumptions used to determine these impairment charges are classified as Level Three in the fair value hierarchy, indicating they involve significant unobservable inputs.
For a prospective franchisee, this indicates that The Standardx's financial performance can be affected by contract terminations, which in turn lead to impairment charges. It would be prudent for potential franchisees to investigate the stability of The Standardx's existing contracts and the factors that might lead to terminations. Reviewing Note 7, as suggested in the FDD, may provide additional insights into acquisition and disposition activities that impact these intangibles.