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Goodwill, Franchise Rights, Favorable and Unfavorable Leases (Notes)
6 Months Ended
Jun. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill And Franchise Rights [Text Block]
Goodwill, Franchise Rights, Favorable and Unfavorable Leases
Goodwill. The Company is required to review goodwill for impairment annually, or more frequently, when events and circumstances indicate that the carrying amount may be impaired. If the determined fair value of goodwill is less than the related carrying amount, an impairment loss is recognized. The Company performs its annual impairment assessment as of the last day of its fiscal year and does not believe circumstances have changed since the last assessment date which would make it necessary to reassess their values. There were no goodwill impairment losses during the three and six months ended June 30, 2013 or the year ended December 30, 2012.
Franchise Rights. Amounts allocated to franchise rights for each acquisition of Burger King restaurants are amortized using the straight-line method over the average remaining term of the acquired franchise agreements plus one twenty-year renewal period.
The Company assesses the potential impairment of franchise rights whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If an indicator of impairment exists, an estimate of the aggregate undiscounted cash flows from the acquired restaurants is compared to the respective carrying value of franchise rights for each acquisition. If an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. No impairment charges were recorded related to the Company’s franchise rights for the three and six months ended June 30, 2013 or the year ended December 30, 2012.
Amortization expense related to franchise rights was $1.1 million and $0.9 million for the three months ended June 30, 2013 and July 1, 2012, respectively and $2.1 million and $1.7 million for the six months ended June 30, 2013 and July 1, 2012, respectively. The Company estimates the annual amortization expense to be $4.1 million in 2013 and in each of the five succeeding years.
Favorable and Unfavorable Leases. Amounts allocated to favorable and unfavorable leases related to the acquisition of 278 Burger King restaurants on May 30, 2012 are being amortized using the straight-line method over the remaining terms of the underlying lease agreements as a net reduction of restaurant rent expense.
The net reduction of rent expense related to the amortization of favorable and unfavorable leases for the three and six months ended June 30, 2013 was $139 and $278, respectively, and the Company expects the net reduction of rent expense from the amortization of favorable and unfavorable leases to be $557 in 2013, $546 in 2014, $528 in 2015, $449 in 2016, $439 in 2017 and $410 in 2018. The net reduction of rent expense related to the amortization of favorable and unfavorable leases was $47 for the three and six months ended July 1, 2012.