Divestitures and Impairment

3 Months Ended

Mar. 27, 2022

Divestitures and Impairment

Divestitures and Impairment

10.  Divestitures and Impairment  

Assets and Liabilities Held for Sale

On March 28, 2022, we refranchised our 51% ownership interest in a 90-restaurant consolidated joint venture in Texas for $14.0 million, net of transaction costs.  The assets and liabilities associated with the joint venture are classified as held for sale in the Condensed Consolidated Balance Sheet as of March 27, 2022.  

		March 27, 2022
Current assets	$	1,632
Property and equipment, net		7,030
Operating lease right-of-use assets		8,924
Goodwill		9,908
Other assets		191
Loss on impairment		(8,412)
Total assets held for sale	$	19,273
Accounts payable, taxes payable, accrued expenses and other	$	1,632
Current deferred revenue		1,930
Current operating lease liabilities		2,338
Long-term operating lease liabilities		7,097
Other long-term liabilities		250
Total liabilities held for sale	$	13,247

Upon reclassification of assets and liabilities held for sale, we recorded a one-time, non-cash charge of $8.4 million which reflects net sale proceeds of $14.0 million, the noncontrolling interest of $4.2 million, and the recognition of an unearned royalty stream of $12.2 million to be recognized as revenue over the 10-year term of the franchise agreement executed concurrent with the disposition in accordance with ASC 810, “Consolidation.” The impairment was recorded in the first quarter of 2022 and realized upon consummation of the sale in the second quarter.

Impairment of Reacquired Master Franchise Rights

In the first quarter of 2022, the Company recorded an impairment of $2.8 million for reacquired franchise rights due to the financial and operational impact of the conflict in Ukraine and government actions taken in response to that conflict, including, but not limited to, international sanctions. The reacquired franchise rights were previously acquired from a former  master franchisee and capitalized by the Company.