Goodwill and Other Intangible Assets
 3 Months Ended
Mar. 29, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

Note 6. GOODWILL and other intangible assets

 

Goodwill

 

Goodwill consists of the following (in thousands):

 

    March 29, 2020     December 29, 2019  
Goodwill:                
Fatburger   $ 529     $ 529  
Buffalo’s     5,365       5,365  
Hurricane     2,772       2,772  
Ponderosa     1,462       1,462  
Yalla     263       263  
Elevation Burger     521       521  
Total goodwill   $ 10,912     $ 10,912  

 

Other Intangible Assets

 

Other intangible assets consist of trademarks and franchise agreements that were classified as identifiable intangible assets at the time of the brands’ acquisition by the Company or by FCCG prior to FCCG’s contribution of the brands to the Company at the time of the initial public offering (in thousands):

 

    March 29, 2020     December 29, 2019  
Trademarks:                
Fatburger   $ 2,135     $ 2,135  
Buffalo’s     27       27  
Hurricane     6,840       6,840  
Ponderosa     7,230       7,230  
Yalla     1,530       1,530  
Elevation Burger     4,690       4,690  
Total trademarks     22,452       22,452  
                 
Franchise agreements:                
Hurricane – cost     4,180       4,180  
Hurricane – accumulated amortization     (563 )     (482 )
Ponderosa – cost     1,640       1,640  
Ponderosa – accumulated amortization     (251 )     (243 )
Elevation Burger – cost     2,450       2,450  
Elevation Burger – accumulated amortization     (388 )     (263 )
Total franchise agreements     7,068       7,282  
Total Other Intangible Assets   $ 29,520     $ 29,734  

 

The expected future amortization of the Company’s capitalized franchise agreements is as follows (in thousands):

 

Fiscal year:        
2020   $ 718  
2021     932  
2022     932  
2023     932  
2024     932  
Thereafter     2,622  
Total   $ 7,068  

 

In response to the adverse effects of COVID-19, we considered whether goodwill and other intangible assets needed to be evaluated for impairment as of March 29, 2020, specifically related to goodwill and the trademark assets. Given the uncertainty regarding the severity, duration and long-term effects of COVID-19, making estimates of the fair value of these assets at this time is significantly affected by assumptions related to ongoing operations including but not limited to the timing of lifting of restrictions on restaurant operating hours, in-house dining limitations or other restrictions that largely limited restaurants to take-out and delivery sales, customer engagement with our brands, the short-term and long-term impact on consumer discretionary spending, and overall global economic conditions. We considered the available facts and made qualitative and quantitative assessments and judgments for what we believed represent reasonably possible outcomes. Although the fair values of certain assets have declined since the time that the most recent annual impairment tests were conducted, we concluded it is more likely than not that neither goodwill nor tradename assets were impaired as of March 29, 2020. However, COVID-19 pandemic events will continue to evolve over time and the negative effects on the operations of our franchisees could prove to be worse than we currently estimate and lead us to record non-cash goodwill or other intangible asset impairment charges in the future periods.