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Franchise Rights Acquired, Goodwill and Other Intangible Assets | 12 Months Ended
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Dec. 28, 2024
Goodwill and Intangible Assets Disclosure [Abstract] |
Franchise Rights Acquired, Goodwill and Other Intangible Assets | 7. Franchise Rights Acquired, Goodwill and Other Intangible Assets Franchise rights acquired are due to acquisitions of the Company’s franchised territories as well as the acquisition of franchise promotion agreements and other factors associated with the acquired franchise territories. For the fiscal year ended December 28, 2024, the change in the carrying value of franchise rights acquired was due to the impairments of the United States, Australia, United Kingdom and New Zealand units of account as discussed below and the effect of exchange rate changes. Goodwill primarily relates to the acquisition of the Company by The Kraft Heinz Company (successor to H.J. Heinz Company) in 1978, and the Compa ny’s acquisitions of WW.com, LLC (formerly known as WW.com, Inc. and WeightWatchers.com, Inc.) in 2005, Sequence in 2023 and the Company’s franchised territories. See Note 6 for additional information on the Company’s acquisitions. For the fiscal year ended December 28, 2024, the change in the carrying value of goodwill was due to the effect of exchange rate changes as follows:
Balance as of December 31, 2022 |  | $ | 155,998 |
Goodwill acquired during the period |  |  | 89,742 |
Goodwill impairment |  |  | (3,586 | )
Effect of exchange rate changes |  |  | 1,287 |
Balance as of December 30, 2023 |  | $ | 243,441 |
Effect of exchange rate changes |  |  | (3,858 | )
Balance as of December 28, 2024 |  | $ | 239,583 |
Accumulated goodwill impairment loss was $25,111 at both December 28, 2024 and December 30, 2023. Change in Goodwill Reporting Units As discussed in Note 1, effective the first day of fiscal 2024 (i.e., December 31, 2023), as a result of the continued evolution of the Company’s centralized organizational structure in fiscal 2023, and management’s 2024 strategic planning process, the Company’s reportable segments changed to one segment for the purpose of making operational and resource decisions and assessing financial performance. In connection with the Company’s change to one reportable segment, the Company’s operating segments also changed to one segment. As a result of this change to the Company’s operating segments, the Company reassessed its reporting units for the evaluation of goodwill during the first quarter of fiscal 2024. In accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 350, Intangibles—Goodwill and Other (“ASC 350”), the Company determines its reporting units based upon whether discrete financial information is available, if management regularly reviews the operating results of the component, the nature of the products offered to customers and the market characteristics of each reporting unit. A reporting unit is considered to be an operating segment or one level below an operating segment also known as a component. Prior to the change in operating segments, the Company’s reporting units for the evaluation of goodwill were determined by country. Component level financial information is reviewed by management across two business lines: Behavioral and Clinical. The Company’s “Behavioral” business line consists of the Company’s Workshops + Digital business and Digital business. Accordingly, these were determined to be the Company's new reporting units as of the first day of fiscal 2024. This change in reporting units qualified as a triggering event and required goodwill to be tested for impairment. As required by ASC 350, the Company tested goodwill for impairment immediately before and after the change in reporting units. As a result of these impairment analyses, it was determined that goodwill was not impaired before or after the change in reporting units. Third Quarter Fiscal 2024 Indefinite-Lived Franchise Rights Acquired and Goodwill Interim Impairment Tests During the quarter ended September 28, 2024, the Company identified various qualitative and quantitative factors which collectively indicated a triggering event had occurred. These factors included the continued decline in the Company’s stock price and market capitalization, and actual business performance. As a result of this triggering event, the Company performed interim impairment tests for all of its franchise rights acquired units of account and goodwill reporting units in the third quarter of fiscal 2024. In performing the interim franchise rights acquired impairment test as of September 28, 2024, the Company determined that the carrying values of its United States and United Kingdom franchise rights acquired with indefinite-lived units of account exceeded their respective fair values. Accordingly, the Company recorded impairment charges for its United States and United Kingdom units of account of $54,295 and $2,750 (which comprised the remaining balance of franchise rights acquired for the United Kingdom unit of account), respectively, in the third quarter of fiscal 2024. These impairments were driven primarily by the weighted average cost of capital used in this interim impairment test, reflecting market factors, including higher interest rates and the trading values of the Company’s equity and debt, and, to a lesser extent, business performance. In performing the interim goodwill impairment test as of September 28, 2024, the Company determined that the carrying values of its goodwill reporting units did not exceed their respective fair values and, therefore, no impairment existed. Based on the results of the interim franchise rights acquired impairment test as of September 28, 2024 performed for the Company’s United States unit of account, which held 100.0% of the Company’s indefinite-lived franchise rights acquired as of the December 28, 2024 balance sheet date, the estimated fair value of this unit of account was equal to its respective carrying value. Accordingly, a change in the underlying assumptions for the United States unit of account may change the results of the impairment assessment and, as such, could result in further impairment of the franchise rights acquired related to the United States, for which the net book value was $68,627 as of December 28, 2024. Based on the results of the interim goodwill impairment test as of September 28, 2024 performed for the Company’s Behavioral re porting unit, which held 62.5% of the Company’s goodwill as of the December 28, 2024 balance sheet date, there was significant headroom in the goodwill impairment test for this unit with the difference between the fair value and the carrying value exceeding 100% and, therefore, no impairment existed. Based on the results of the interim goodwill impairment test as of September 28, 2024 performed for the Company’s Clinical reporting unit, which held 37.5% of the Company’s goodwill as of the December 28, 2024 balance sheet date, the estimated fair value of this reporting unit was at least 20% higher than the respective unit's carrying value and, therefore, no impairment existed. Indefinite-Lived Franchise Rights Acquired and Goodwill Annual Impairment Tests The Company performed its annual fair value impairment testing on its indefinite-lived franchise rights acquired and goodwill for fiscal 2024, fiscal 2023 and fiscal 2022 on May 5, 2024, May 7, 2023 and May 8, 2022, respectively. In performing the annual impairment analyses as of May 5, 2024 and May 7, 2023, the Company determined that the carrying values of its franchise rights acquired with indefinite-lived units of account and goodwill reporting units did not exceed their respective fair values and, therefore, no impairment existed. In performing the annual impairment analysis as of May 8, 2022, the Company determined that (i) the carrying values of its Canada and New Zealand franchise rights acquired with indefinite-lived units of account exceeded their respective fair values and, as a result, the Company recorded impairment charges for its Canada and New Zealand units of account of $24,485 and $834, respectively, in the second quarter of fiscal 2022; and (ii) the carrying values of all of its other franchise rights acquired with indefinite-lived units of account did not exceed their respective fair values and, therefore, no impairment existed with respect thereto. In performing the annual impairment analysis as of May 8, 2022, the Company determined that the carrying values of its goodwill reporting units did not exceed their respective fair values and, therefore, no impairment existed. Based on the results of the Company’s May 5, 2024 annual franchise rights acquired impairment test performed for its United States and United Kingdom units of account, each unit of account had an estimated fair value at least 5% higher than the respective unit's carrying value and, therefore, no impairment existed. Based on the results of the Company’s May 5, 2024 annual goodwill impairment test performed for all of its reporting units, each unit had an estimated fair value at least 30% higher than the respective unit’s carrying value and, therefore, no impairment existed. First Quarter Fiscal 2024 Indefinite-Lived Franchise Rights Acquired and Goodwill Interim Impairment Tests During the quarter ended March 30, 2024, the Company identified various qualitative and quantitative factors which collectively indicated a triggering event had occurred. These factors included the continued decline in the Company’s stock price and market capitalization, and actual business performance. As a result of this triggering event, the Company performed interim impairment tests for all of its franchise rights acquired units of account and goodwill reporting units in the first quarter of fiscal 2024. In performing the interim franchise rights acquired impairment test as of March 30, 2024, the Company determined that the carrying values of its United States, Australia, New Zealand and United Kingdom franchise rights acquired with indefinite-lived units of account exceeded their respective fair values. Accordingly, the Company recorded impairment charges for its United States, Australia, New Zealand and United Kingdom units of account of $251,431, $4,074 (which comprised the remaining balance of franchise rights acquired for the Australia unit of account), $2,328 (which comprised the remaining balance of franchise rights acquired for the New Zealand unit of account) and $155, respectively, in the first quarter of fiscal 2024. These impairments were driven primarily by the weighted average cost of capital used in this interim impairment test, reflecting market factors, including higher interest rates and the trading values of the Company’s equity and debt, and, to a lesser extent, business performance. Based on the results of the interim goodwill impairment test as of March 30, 2024 performed for all of the Company’s reporting units, each unit had an estimated fair value at least 25% higher than the respective unit’s carrying value and, therefore, no impairment existed. Republic of Ireland and Northern Ireland Goodwill Impairments During the fourth quarter of fiscal 2023, the Company had a shift in future strategic priorities and as a result, a triggering event occurred which required the Company to impair the remaining goodwill balances for the Republic of Ireland and Northern Ireland reporting units, resulting in goodwill impairment charges of $2,383 and $1,203, respectively. With respect to its Republic of Ireland reporting unit, during the fourth quarter of fiscal 2022, the Company made a strategic decision to delay the launch of the Digital business in that country. As a result of this decision, a triggering event occurred which required the Company to perform an interim goodwill impairment analysis. In performing its discounted cash flow analysis, the Company determined that the carrying value of this reporting unit exceeded its fair value and, as a result, recorded an impairment charge of $2,023. The preponderance of this impairment was driven by a decrease in projected revenues and an increased weighted average cost of capital used in this interim impairment test as compared to the weighted average cost of capital used in the May 8, 2022 annual impairment test of its goodwill, reflecting market factors including higher interest rates and the trading values of the Company's equity and debt. Fourth Quarter Fiscal 2022 Indefinite-Lived Franchise Rights Acquired Interim Impairment Test During the quarter ended December 31, 2022, the Company identified various qualitative and quantitative factors which collectively indicated a triggering event had occurred. These factors included (i) actual business performance as compared to the assumptions used in its third quarter fiscal 2022 interim impairment test for the United States, Canada and New Zealand units of account and as compared to the assumptions used in its annual impairment test in the second quarter of fiscal 2022 for the United Kingdom and Australia units of account; and (ii) the further decline in the Company’s market capitalization and market factors, including the increase in interest rates. As a result of this triggering event, the Company performed an interim impairment test for all of its franchise rights acquired units of account in the fourth quarter of fiscal 2022. In performing the interim franchise rights acquired impairment test as of December 31, 2022, the Company determined that the carrying values of its United States, Canada, United Kingdom and Australia franchise rights acquired with indefinite-lived units of account exceeded their respective fair values. Accordingly, the Company recorded impairment charges for its United States, Canada, United Kingdom and Australia units of account of $25,739, $19,657 (which comprised the remaining balance of franchise rights acquired for this unit of account), $8,275 and $1,872, respectively, in the fourth quarter of fiscal 2022. These impairments were driven by the increased weighted average cost of capital used in this interim impairment test as compared to the weighted average cost of capital used in the third quarter fiscal 2022 interim impairment test for the United States and Canada units of account and as compared the weighted average cost of capital used in the May 8, 2022 annual impairment test for the United Kingdom and Australia units of account, reflecting market factors including higher interest rates and the trading values of the Company's equity and debt. Additionally, these impairments were driven by the decline in the assumptions used in the hypothetical start-up approach and relief from royalty approach analyses as compared to the assumptions used in the third quarter fiscal 2022 interim impairment test for the United States and Canada units of account and as compared the assumptions used in the May 8, 2022 annual impairment test for the United Kingdom and Australia units of account. The carrying value of its New Zealand franchise rights acquired with indefinite-lived unit of account did not exceed its respective fair value and, therefore, no impairment existed with respect thereto. Third Quarter Fiscal 2022 Indefinite-Lived Franchise Rights Acquired Interim Impairment Test During the quarter ended October 1, 2022, the Company identified various qualitative and quantitative factors which collectively, when combined with the difference or lack thereof between the estimated fair value of the applicable unit of account and its carrying value for the United States, Canada and New Zealand units of account, indicated a triggering event had occurred within these units of account. These factors included actual business performance as compared to the assumptions used in its annual impairment test, the continued decline in the Company’s market capitalization and market factors, including the increase in interest rates. As a result of this triggering event, the Company performed an interim impairment test of these units of account. In performing the interim franchise rights acquired impairment test as of October 1, 2022, the Company determined that the carrying values of its United States, Canada and New Zealand franchise rights acquired with indefinite-lived units of account exceeded their respective fair values. Accordingly, the Company recorded impairment charges for its United States, Canada and New Zealand units of account of $298,291, $13,312 and $1,138, respectively, in the third quarter of fiscal 2022. The preponderance of these impairments was driven by the increased weighted average cost of capital used in this interim impairment test as compared to the weighted average cost of capital used in the May 8, 2022 annual impairment test of its indefinite-lived franchise rights acquired, reflecting market factors including higher interest rates and the trading values of the Company's equity and debt. Kurbo Goodwill Impairment On August 10, 2018, the Company acquired substantially all of the assets of Kurbo Health, Inc., a family-based healthy lifestyle coaching program, for a net purchase price of $3,063, of which $1,101 was allocated to goodwill. The goodwill was deductible annually for tax purposes. The Company determined in the second quarter of fiscal 2022 to exit the business of its wholly-owned subsidiary Kurbo, Inc. (“Kurbo”) in the third quarter of fiscal 2022 as part of its strategic plan. As a result of this determination, the Company recorded an impairment charge of $1,101 in the second quarter of fiscal 2022, which comprised the entire goodwill balance for Kurbo. Finite-lived Intangible Assets The carrying values of finite-lived intangible assets as of December 28, 2024 and December 30, 2023 were as follows:
|  | December 28, 2024 |  |  | December 30, 2023 |
|  | Gross |  |  |  |  |  | Gross |  |  |  |
|  | Carrying |  |  | Accumulated |  |  | Carrying |  |  | Accumulated |
|  | Amount |  |  | Amortization |  |  | Amount |  |  | Amortization |
Capitalized software and website development costs |  | $ | 255,822 |  |  | $ | 218,103 |  |  | $ | 251,410 |  |  | $ | 195,696 |
Trademarks |  |  | 12,192 |  |  |  | 12,103 |  |  |  | 12,188 |  |  |  | 12,024 |
Other |  |  | 13,537 |  |  |  | 6,714 |  |  |  | 13,991 |  |  |  | 6,661 |
Trademarks and other intangible assets |  | $ | 281,551 |  |  | $ | 236,920 |  |  | $ | 277,589 |  |  | $ | 214,381 |
Franchise rights acquired |  |  | 7,820 |  |  |  | 5,316 |  |  |  | 8,029 |  |  |  | 5,314 |
Total finite-lived intangible assets |  | $ | 289,371 |  |  | $ | 242,236 |  |  | $ | 285,618 |  |  | $ | 219,695 |
During the fourth quarter of fiscal 2023, the Company had a shift in future strategic priorities and as a result, a triggering event occurred which required the Company to impair the remaining franchise rights acquired balance for the Northern Ireland unit of account, resulting in a franchise rights acquired impairment charge of $47. Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of $33,596, $42,449 and $33,676 for the fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively. Estimated amortization expense of existing finite-lived intangible assets for the next five fiscal years and thereafter is as follows:
Fiscal 2025 |  | $ | 22,025 |
Fiscal 2026 |  | $ | 13,143 |
Fiscal 2027 |  | $ | 4,776 |
Fiscal 2028 |  | $ | 727 |
Fiscal 2029 |  | $ | 704 |
Thereafter |  | $ | 5,760 |

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