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Intangible Assets (Notes)
6 Months Ended
Jun. 28, 2015
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill And Franchise Rights [Text Block]
Intangible Assets
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 impairment losses during the three and six months ended June 28, 2015 or June 29, 2014. Additions to goodwill from the 2015 acquisition referenced in Note 2 totaled $0.1 million for the three months ended June 28, 2015.
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. Additions to franchise rights from the 2015 acquisition referenced in Note 2 totaled $0.4 million for the three months ended June 28, 2015.
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 28, 2015 or June 29, 2014.
Amortization expense related to franchise rights was $1.2 million and $1.0 million for the three months ended June 28, 2015 and June 29, 2014, respectively, and $2.3 million and $2.1 million for the six months ended June 28, 2015 and June 29, 2014, respectively. The Company expects annual amortization expense to be $4.7 million in 2015 and in each of the following five years.
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 was $0.2 million and $0.1 million for the three months ended June 28, 2015 and June 29, 2014, respectively, and was $0.4 million and $0.3 million for the six months ended June 28, 2015 and June 29, 2014, respectively. The Company expects the net annual reduction of rent expense to be $0.8 million in 2015, $0.7 million in 2016, 2017 and 2018, and $0.6 million in 2019 and 2020.