Comfort Inn 2007 Annual Report Download - page 65

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CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)
The estimated annual amortization expense related to the Company’ s trademarks for each of the years ending
December 31, 2008 through 2012 is as follows:
Year
(In millions)
2008................................................................................................................................. $ 0.5
2009................................................................................................................................. 0.5
2010................................................................................................................................. 0.5
2011................................................................................................................................. 0.3
2012................................................................................................................................. 0.3
6. Receivable-Marketing and Reservation Fees
The Company’ s franchise agreements require the payment of franchise fees, which include marketing and
reservation fees. The Company is obligated to use the marketing and reservation fees it assesses against the current
franchisees comprising its various hotel brand systems to provide marketing and reservation services appropriate for the
successful operation of the systems. In discharging its obligation to provide sufficient and appropriate marketing and
reservation services, the Company has the right to expend funds in an amount reasonably necessary to ensure the
provision of such services, whether or not such amount is currently available to the Company for reimbursement. The
franchise agreements provide the Company the right to advance monies to the franchise system when the needs of the
system surpass the balances currently available.
Under the terms of these agreements, the Company has the legally enforceable right to assess and collect from its
current franchisees fees sufficient to pay for the marketing and reservation services the Company has procured for the
benefit of the franchise system, including fees to reimburse the Company for past services rendered. The Company has the
contractual authority to require that the franchisees in the system at any given point repay any deficits related to marketing
and reservation activities. The Company’ s current franchisees are legally obligated to pay any assessment the Company
imposes on its franchisees to obtain reimbursement of such deficit regardless of whether those constituents continue to
generate gross room revenue. The Company has no present intention to accelerate repayment of the deficit from current
franchisees. Cumulative reservation and marketing fees not expended are recorded as a payable in the financial statements
and are carried over to the next fiscal year and expended in accordance with the franchise agreements.
The marketing fees receivable at December 31, 2007 and 2006 was $6.8 million and $6.7 million, respectively. As
of December 31, 2007 and 2006, cumulative reservation fees collected exceeded expenses by $11.9 million and $8.4
million, respectively and the excess has been reflected as an other long-term liability in the accompanying consolidated
balance sheets. Depreciation and amortization expense attributable to marketing and reservation activities for the years
ended December 31, 2007, 2006 and 2005 was $8.3 million, $7.9 million and $7.6 million, respectively. Interest expense
attributable to reservation activities was $0.5 million, $0.9 million and $1.1 million for the years ended December 31,
2007, 2006 and 2005, respectively.
7. Other Assets
Other assets consist of the following at:
December 31,
2007
2006
(In thousands)
Forgivable notes receivable........................................................................................................................... $ 7,637 $ 9,083
Other notes receivable ................................................................................................................................... 1,492
—
Investments in equity method investees ........................................................................................................ 384
337
Other assets ................................................................................................................................................... 1,766
2,041
Total .............................................................................................................................................................. $ 11,279 $ 11,461
Forgivable Notes Receivable
From time to time, the Company provides financing to franchisees for property improvements and other purposes in
the form of forgivable promissory notes. The terms of the notes range from 3 to 10 years, bearing market interest rates,
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