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 the fiscal year. In performing its goodwill impairment test, the Company compared the net book value of its reporting unit to its estimated fair value, the latter determined by employing a combination of a discounted cash flow analysis and a market-based approach. There have been no recorded goodwill impairment losses during the years ended December 29, 2019, December 30, 2018 and December 31, 2017.



Goodwill at December 31, 2017	$	36,792
Acquisitions of restaurants (Note 2)	1,677
Goodwill at December 30, 2018	38,469
Acquisitions of restaurants (Note 2)	84,150
Goodwill at December 29, 2019	$	122,619

Franchise Rights. Amounts allocated to franchise rights for each acquisition of Burger King® and Popeyes® 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 following is a summary of the Company’s franchise rights as of the respective balance sheet dates:



Balance at December 31, 2017	$	152,028
Acquisitions of restaurants (Note 2)	31,275
Amortization expense	(7,406		)
Balance at December 30, 2018	175,897
Acquisitions of restaurants (Note 2)	184,309
Amortization expense	(11,265		)
Balance at December 29, 2019	$	348,941

Amortization expense related to franchise rights for the year ended December 31, 2017 was $6.8 million. The Company expects annual amortization to be $12.9 million in each of the next five fiscal years. No impairment charges were recorded related to the Company’s franchise rights during the years ended December 29, 2019, December 30, 2018 and December 31, 2017.

Favorable and Unfavorable Leases. Prior to adoption of ASC 842, amounts allocated to favorable and unfavorable leases were amortized using the straight-line method over the remaining terms of the underlying lease agreements as a net reduction of restaurant rent expense. In accordance with the adoption of ASC 842, as of December 31, 2018, the first day of fiscal 2019, unamortized favorable leases of $5.9 million and unfavorable leases of $12.3 million were reclassified to be included in the beginning balance of operating right-of-use assets.

The following is a summary of the Company’s favorable and unfavorable leases as of December 30, 2018, which were included as assets and liabilities, respectively, on the accompanying consolidated balance sheets:



	December 30, 2018
	Gross Carrying Amount		Accumulated Amortization
Favorable leases	$	8,148	$	2,256
Unfavorable leases	$	18,423	$	6,075

The net reduction of rent expense related to the amortization of favorable and unfavorable leases for the years ended December 30, 2018 and December 31, 2017 was $0.8 million and $0.9 million, respectively.