Intangible Assets (Notes)

3 Months Ended

Apr. 03, 2022

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 the eighth month of its fiscal year. As part of this goodwill impairment assessment, the Company considers certain qualitative factors, such as the Company’s performance, business forecasts and expansion plans. Using both the income approach and the market approach, the Company compares the fair value of each of its reporting units to carrying value. The Company assessed events and circumstances from the date of its annual goodwill impairment test through April 3, 2022 and there were no indicators representing a triggering event. There were no recorded goodwill impairment losses during the three months ended April 3, 2022 and April 4, 2021.

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 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 three months ended April 3, 2022 and April 4, 2021. The change in franchise rights for the three months ended April 3, 2022 is summarized below:

Balance at January 2, 2022	$	326,769
Amortization expense	(3,497)
Balance at April 3, 2022	$	323,272

Amortization expense related to franchise rights was $3.5 million and $3.4 million for the three months ended April 3, 2022 and April 4, 2021, respectively. The Company expects annual amortization expense to be $14.0 million in fiscal 2022, 2023 and 2024 and $13.9 million in 2025 and thereafter.