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Goodwill, Franchise Rights, Favorable and Unfavorable Leases (Notes)
6 Months Ended
Jun. 29, 2014
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 its value. There were no goodwill additions or impairment losses during the three and six months ended June 29, 2014 or the year ended December 29, 2013.
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 during the three and six months ended June 29, 2014 or the year ended December 29, 2013.
Amortization expense related to franchise rights was $1.0 million and $1.1 million in three months ended June 29, 2014 and June 30, 2013, respectively, and $2.1 million in both the six months ended June 29, 2014 and June 30, 2013. The Company estimates the annual amortization expense to be $4.2 million in 2014, 2015 and 2016 and $4.1 million in 2017, 2018 and 2019.
Favorable and Unfavorable Leases. Amounts allocated to favorable and unfavorable leases 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 both the three months ended June 29, 2014 and June 30, 2013 was $0.1 million and was $0.3 million for both the six months ended June 29, 2014 and June 30, 2013. The Company expects the annual net reduction of rent expense from the amortization of favorable and unfavorable leases to be $0.5 million in 2014, 2015, and 2016 and $0.4 million in 2017, 2018 and 2019.