Goodwill, Franchise Rights and Other Intangibles

12 Months Ended

Dec. 31, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, Franchise Rights and Other Intangibles

Goodwill relates to (i) the purchase price of a minority interest in the Company for consideration in excess of the recorded minority interest, (ii) the acquisition of 100% of the stock of Suburban Franchise Holding Company, Inc. and its wholly-owned subsidiary, Suburban Franchise Systems, Inc. (“Suburban Transaction”) and (iii) the acquisition of the remaining 60% ownership interest in Choice Hospitality (India) Ltd.

The components of goodwill are as follows:



	December 31,
	2011		2010
	(In thousands)
Minority interest	$	60,620	$	60,620
Suburban transaction	5,193		5,193
India acquisition (see Note 12)	192		228
Total	$	66,005	$	66,041

The Company is not required to amortize goodwill. The change in value of goodwill related to the India acquisition represents fluctuations in exchange rates.

Franchise rights totaling $13.5 million and $17.1 million at December 31, 2011 and 2010, respectively, represent the unamortized purchase price assigned to acquire long-term franchise contracts. As of December 31, 2011 and 2010, the unamortized balance relates primarily to the Econo Lodge, Suburban Extended Stay Hotel and Choice Hotels Australasia franchise rights. The franchise rights are being amortized over lives ranging from 5 to 17 years. Amortization expense for the years ended December 31, 2011, 2010 and 2009 amounted to $3.6 million, $4.2 million and $3.8 million, respectively. Franchise rights are net of accumulated amortization of $70.2 million and $66.6 million at December 31, 2011 and 2010, respectively.

The estimated annual amortization expense related to the Company’s franchise rights for each of the years ending December 31, 2012 through 2016 is as follows:



Year	(In millions)
2012	$	3.5
2013	$	3.5
2014	$	3.3
2015	$	2.3
2016	$	0.4

Franchise rights and other identifiable intangible assets include approximately $3.8 million and $3.8 million of unamortized intangible assets related to trademarks at December 31, 2011 and 2010, respectively. Trademarks acquired in the Suburban Transaction totaling approximately $1.0 million have an indefinite life and therefore, no amounts have been amortized. The costs of registering and renewing existing trademarks are being amortized over ten years. Amortization expense for the years ended December 31, 2011, 2010 and 2009 amounted to $0.5 million, $0.6 million and $0.6 million, respectively. Trademarks are net of accumulated amortization of $6.4 million and $6.6 million at December 31, 2011 and 2010, respectively.

The estimated annual amortization expense related to the Company’s trademarks for each of the years ending December 31, 2012 through 2016 is as follows:



Year	(In millions)
2012	$	0.5
2013	$	0.5
2014	$	0.4
2015	$	0.4
2016	$	0.3

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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