Summary of Reacquired Franchise Rights It has come to our attention that much of Roman Holiday’s recent revenue growth came from acquisition of franchise right and existing restaurants rather than real growth in the franchise. Management is aware of these issues and may be feeling some pressure to meet growth targets and earnings forecasts. In the following working papers, we address this potential issue by reviewing the various accounting treatments for the reacquired franchise rights. We also examine the reacquired franchise rights from the Arizona acquisition and assess the reasonableness of management’s assumptions in its impairment analysis.
Q1
Purpose: The purpose of this testing procedure is to verify the mathematical accuracy
The classification and the nature of intangible assets vary significantly in the quick-service restaurant industry and often depend on the company.
We will base our analysis by SFAS No.142. Criteria of SFAS No. 142 to determine the useful life of the intangible asset is quoted in the appendix 2.
There is no expected use of the reacquired franchise rights; for competitive, even though Roman holiday only occupied less than 5% of the US market; it targets specific customers who are willing to pay premiums. For Roman holiday, it is trying to create a niche. The competitiveness is less than the companies whose strategy is cost leader. And after the financial crisis of 2009, as for 2012, the market is warming up, the defect of the crisis is fading away, the demand will not be affected. So there is no legal, regulatory, contractual provision competitive, economic, or other factors limit the useful life that may limit the useful life.
Conclusion:
Since there is no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of reacquired franchise rights, the classification of indefinite useful life is appropriate.

Appendix 1
Client-prepared Schedule of Reacquired Franchise Rights Senior Franchisee Market | Minimum Development Quota | Restaurants Previously Opened by Senior Franchisee | Year Acquired | Book Value of Reacquired Franchise Right (in 000s) | Tickmarks | New Jersey | 20 | 2 |