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Shop Acquisitions
 9 Months Ended
Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract]  
Shop Acquisitions
NOTE 4 — Shop Acquisitions
During the nine months ended September 30, 2022, the Company repurchased the franchise rights and assets of five shops from one franchisee in California. The following table summarizes the allocations of the purchase prices to the estimated fair values of assets acquired and liabilities assumed. The fair values for the 2022 acquisitions are considered preliminary and subject to change within the measurement period (up to one year from the acquisition dates), as we have not obtained all of the detailed information to finalize the opening balance sheet related to the building and leasehold improvements purchased and franchise rights reacquired.
(in thousands)September 30, 2022
Acquisition consideration:
Purchase price consideration$6,051 
Equipment and fixtures197 
Building and leasehold improvements1,470 
Inventories67 
Other assets6 
Operating lease right-of-use assets2,327 
Reacquired franchise rights1,735 
Other liabilities(88)
Gift card liability(250)
Operating lease obligations(2,327)
Net assets acquired3,137 
Goodwill$2,914 
Reacquired franchise rights acquired have weighted-average useful lives of 4.2 years at the time of purchase for the acquisitions made during the nine months ended September 30, 2022. The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill and is attributable to the benefits expected as a result of the acquisitions, including sales and growth opportunities, and is expected to be fully deductible for tax purposes. Goodwill is allocated entirely to the Company-operated shops segment.
The fair value measurement of tangible and intangible assets and liabilities as of the acquisition dates is based on significant inputs not observed in the market and thus represents a Level 3 fair value measurement. Fair value measurements for reacquired franchise rights were determined using the income approach. Fair value measurements for property and equipment were determined using the cost approach.
The results of operations for the 2022 acquisitions are included in the Company’s condensed consolidated statements of operations beginning on the dates of acquisition. Revenues of approximately $6.7 million and net income of approximately $1.2 million are included in the Company’s condensed consolidated statements of operations for the nine months ended September 30, 2022.
The following table reflects the unaudited pro forma results of the Company and the five shops purchased in 2022 as if the acquisitions had taken place as of January 1, 2021:
Nine Months Ended September 30,
(in thousands; unaudited)20222021
Revenue$539,136 $366,564 
Net loss$(16,058)$(108,218)