Intangible Assets:

6 Months Ended

Jul. 01, 2023

Intangible Assets

Intangible Assets

6. Intangible Assets

In June 2022, Winmark terminated an agreement that contained the rights for eleven Play It Again Sports stores to operate separately from Winmark’s franchise system. In terminating the agreement, which included $3.54 million of consideration paid by Winmark, Winmark reacquired the franchise rights to these eleven stores. Upon termination of the agreement, individual franchise agreements were signed for these eleven stores, each with an initial term of ten years.

Intangible assets consist of these reacquired franchise rights. The Company amortizes the fair value of the reacquired franchise rights over the contract term of the franchise. The Company recognized $177,000 and $14,800 of amortization expense for the six months ended July 1, 2023 and June 25, 2022, respectively.

The following table illustrates future amortization to be expensed for the remainder of 2023 and full fiscal years thereafter related to reacquired franchise rights as of July 1, 2023.

Amortization expected to be expensed in	Amount
2023	$	177,000
2024		354,000
2025		354,000
2026		354,000
2027		354,000
Thereafter		1,578,300
	$	3,171,300