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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 001-36786
 
 RESTAURANT BRANDS INTERNATIONAL INC.
(Exact Name of Registrant as Specified in its Charter)


Canada 98-1202754
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
130 King Street West, Suite 300 M5X 1E1
Toronto, Ontario
(Address of Principal Executive Offices) (Zip Code)
(905) 339-6011
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class Trading SymbolsName of each exchange on which registered
Common Shares, without par value QSRNew York Stock Exchange
 Toronto Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of October 28, 2022, there were 305,904,620 common shares of the Registrant outstanding.



RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 
3

PART I — Financial Information
Item 1. Financial Statements
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)
 As of
September 30,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$946 $1,087 
Accounts and notes receivable, net of allowance of $26 and $18, respectively
598 547 
Inventories, net129 96 
Prepaids and other current assets251 86 
Total current assets1,924 1,816 
Property and equipment, net of accumulated depreciation and amortization of $1,022 and $979, respectively
1,913 2,035 
Operating lease assets, net1,056 1,130 
Intangible assets, net10,831 11,417 
Goodwill5,605 6,006 
Net investment in property leased to franchisees83 80 
Other assets, net1,145 762 
Total assets$22,557 $23,246 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts and drafts payable$696 $614 
Other accrued liabilities959 947 
Gift card liability148 221 
Current portion of long-term debt and finance leases117 96 
Total current liabilities1,920 1,878 
Long-term debt, net of current portion12,853 12,916 
Finance leases, net of current portion310 333 
Operating lease liabilities, net of current portion1,003 1,070 
Other liabilities, net1,044 1,822 
Deferred income taxes, net1,388 1,374 
Total liabilities18,518 19,393 
Shareholders’ equity:
Common shares, no par value; Unlimited shares authorized at September 30, 2022 and December 31, 2021; 305,859,367 shares issued and outstanding at September 30, 2022; 309,025,068 shares issued and outstanding at December 31, 2021
1,964 2,156 
Retained earnings1,062 791 
Accumulated other comprehensive income (loss)(713)(710)
Total Restaurant Brands International Inc. shareholders’ equity2,313 2,237 
Noncontrolling interests1,726 1,616 
Total shareholders’ equity4,039 3,853 
Total liabilities and shareholders’ equity$22,557 $23,246 
See accompanying notes to condensed consolidated financial statements.
4

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In millions of U.S. dollars, except per share data)
(Unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Revenues:
Sales$759 $621 $2,076 $1,718 
Franchise and property revenues698 635 1,989 1,795 
Advertising revenues and other services269 239 751 680 
Total revenues1,726 1,495 4,816 4,193 
Operating costs and expenses:
Cost of sales615 490 1,693 1,358 
Franchise and property expenses137 121 392 358 
Advertising expenses and other services276 245 782 725 
General and administrative expenses156 115 435 327 
(Income) loss from equity method investments8 7 30 12 
Other operating expenses (income), net(27)(16)(68)(50)
Total operating costs and expenses1,165 962 3,264 2,730 
Income from operations561 533 1,552 1,463 
Interest expense, net133 128 389 378 
Loss on early extinguishment of debt 11  11 
Income before income taxes428 394 1,163 1,074 
Income tax expense (benefit)(102)65 17 83 
Net income530 329 1,146 991 
Net income attributable to noncontrolling interests (Note 13)170 108 367 332 
Net income attributable to common shareholders$360 $221 $779 $659 
Earnings per common share
Basic$1.18 $0.71 $2.53 $2.14 
Diluted$1.17 $0.70 $2.51 $2.12 
Weighted average shares outstanding (in millions):
Basic306 311 308 308 
Diluted454 465 455 465 
See accompanying notes to condensed consolidated financial statements.

5

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In millions of U.S. dollars)
(Unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
 2022202120222021
Net income$530 $329 $1,146 $991 
Foreign currency translation adjustment(727)(257)(1,015)(62)
Net change in fair value of net investment hedges, net of tax of $(87), $(31), $(100) and $10
384 143 575 101 
Net change in fair value of cash flow hedges, net of tax of $(55), $(4), $(145) and $(32)
150 13 394 68 
Amounts reclassified to earnings of cash flow hedges, net of tax of $(2), $(9), $(15) and $(21)
5 24 42 77 
Gain (loss) recognized on other, net of tax of $0, $0, $0 and $0
1  3 2 
Other comprehensive income (loss)(187)(77)(1)186 
Comprehensive income (loss)343 252 1,145 1,177 
Comprehensive income (loss) attributable to noncontrolling interests110 83 366 395 
Comprehensive income (loss) attributable to common shareholders$233 $169 $779 $782 
See accompanying notes to condensed consolidated financial statements.

6

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders’ Equity
(In millions of U.S. dollars, except shares and per share data)
(Unaudited)
 Issued Common SharesRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interest
Total
 SharesAmount
Balances at December 31, 2021309,025,068 $2,156 $791 $(710)$1,616 $3,853 
Stock option exercises87,177 3 — — — 3 
Share-based compensation— 24 — — — 24 
Issuance of shares906,260 13 — — — 13 
Dividends declared ($0.54 per share)
— — (167)— — (167)
Dividend equivalents declared on restricted stock units— 3 (3)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.54 per unit)
— — — — (78)(78)
Exchange of Partnership exchangeable units for RBI common shares1,525,900 21 — (3)(18) 
Repurchase of RBI common shares(2,860,002)(161)— — — (161)
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 183 — 87 270 
Other comprehensive income (loss)— — — 140 65 205 
Balances at March 31, 2022308,684,403 $2,059 $804 $(573)$1,671 $3,961 
Stock option exercises25,277 1 — — — 1 
Share-based compensation— 29 — — — 29 
Issuance of shares124,065 — — — —  
Dividends declared ($0.54 per share)
— — (166)— — (166)
Dividend equivalents declared on restricted stock units— 3 (3)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.54 per unit)
— — — — (77)(77)
Exchange of Partnership exchangeable units for RBI common shares151,154 2 — — (2) 
Repurchase of RBI common shares(3,241,362)(165)— — — (165)
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 236 — 110 346 
Other comprehensive income (loss)— — — (13)(6)(19)
Balances at June 30, 2022305,743,537 $1,929 $871 $(586)$1,695 $3,909 
Stock option exercises48,422 2 — — — 2 
Share-based compensation— 29 — — — 29 
Issuance of shares49,603 — — — — — 
Dividends declared ($0.54 per share)
— — (165)— — (165)
Dividend equivalents declared on restricted stock units— 4 (4)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.54 per unit)
— — — — (77)(77)
Exchange of Partnership exchangeable units for RBI common shares17,805 — — — — — 
Restaurant VIE contributions (distributions)— — — — (2)(2)
Net income— — 360 — 170 530 
Other comprehensive income (loss)— — — (127)(60)(187)
Balances at September 30, 2022305,859,367 $1,964 $1,062 $(713)$1,726 $4,039 
See accompanying notes to condensed consolidated financial statements.
7


RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders’ Equity
(In millions of U.S. dollars, except shares and per share data)
(Unaudited)
Issued Common SharesRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interest
Total
SharesAmount
Balances at December 31, 2020304,718,749 $2,399 $622 $(854)$1,554 $3,721 
Stock option exercises530,963 20 — — — 20 
Share-based compensation— 22 — — — 22 
Issuance of shares1,636,858 9 — — — 9 
Dividends declared ($0.53 per share)
— — (163)— — (163)
Dividend equivalents declared on restricted stock units— 3 (3)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.53 per unit)
— — — — (82)(82)
Exchange of Partnership exchangeable units for RBI common shares72,671 1 — — (1) 
Restaurant VIE contributions (distributions)— — — — 1 1 
Net income— — 179 — 92 271 
Other comprehensive income (loss)— — — 135 68 203 
Balances at March 31, 2021306,959,241 $2,454 $635 $(719)$1,632 $4,002 
Stock option exercises958,671 37 — — — 37 
Share-based compensation— 18 — — — 18 
Issuance of shares34,858 — — — —  
Dividends declared ($0.53 per share)
— — (164)— — (164)
Dividend equivalents declared on restricted stock units— 2 (2)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.53 per unit)
— — — — (82)(82)
Exchange of Partnership exchangeable units for RBI common shares87,767 1 — — (1) 
Restaurant VIE contributions (distributions)— — — — (3)(3)
Net income— — 259 — 132 391 
Other comprehensive income (loss)— — — 40 20 60 
Balances at June 30, 2021308,040,537 $2,512 $728 $(679)$1,698 $4,259 
Stock option exercises93,012 4 — — — 4 
Share-based compensation— 22 — — — 22 
Issuance of shares92,888 — — — —  
Dividends declared ($0.53 per share)
— — (167)— — (167)
Dividend equivalents declared on restricted stock units— 3 (3)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.53 per unit)
— — — — (77)(77)
Exchange of Partnership exchangeable units for RBI common shares9,682,964 131 — (22)(109) 
Repurchase of RBI common shares(2,843,562)(182)— — — (182)
Restaurant VIE contributions (distributions)— — — — (3)(3)
Net income— — 221 — 108 329 
Other comprehensive income (loss)— — — (52)(25)(77)
Balances at September 30, 2021315,065,839 $2,490 $779 $(753)$1,592 $4,108 
See accompanying notes to condensed consolidated financial statements.
8

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions of U.S. dollars)
(Unaudited)
 Nine Months Ended September 30,
 20222021
Cash flows from operating activities:
Net income$1,146 $991 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization143 150 
Premiums paid and non-cash loss on early extinguishment of debt 11 
Amortization of deferred financing costs and debt issuance discount21 20 
(Income) loss from equity method investments30 12 
(Gain) loss on remeasurement of foreign denominated transactions(82)(58)
Net (gains) losses on derivatives17 65 
Share-based compensation and non-cash incentive compensation expense93 71 
Deferred income taxes(29)35 
Other8 (14)
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable(93)11 
Inventories and prepaids and other current assets(67)(3)
Accounts and drafts payable113 129 
Other accrued liabilities and gift card liability(74)(87)
Tenant inducements paid to franchisees(13)(5)
Other long-term assets and liabilities(146)(73)
Net cash provided by operating activities1,067 1,255 
Cash flows from investing activities:
Payments for property and equipment(52)(70)
Net proceeds from disposal of assets, restaurant closures, and refranchisings11 14 
Net payments in connection with purchase of Firehouse Subs(12) 
Settlement/sale of derivatives, net22 2 
Other investing activities, net(35)(15)
Net cash (used for) provided by investing activities(66)(69)
Cash flows from financing activities:
Proceeds from long-term debt2 802 
Repayments of long-term debt and finance leases(71)(865)
Payment of financing costs (7)
Payment of dividends on common shares and distributions on Partnership exchangeable units(728)(730)
Repurchase of common shares(326)(182)
Proceeds from stock option exercises7 60 
(Payments) proceeds from derivatives8 (45)
Other financing activities, net(3)(3)
Net cash (used for) provided by financing activities(1,111)(970)
Effect of exchange rates on cash and cash equivalents(31)(3)
Increase (decrease) in cash and cash equivalents(141)213 
Cash and cash equivalents at beginning of period1,087 1,560 
Cash and cash equivalents at end of period$946 $1,773 
Supplemental cash flow disclosures:
Interest paid$318 $281 
Income taxes paid$177 $189 
See accompanying notes to condensed consolidated financial statements.
9

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Description of Business and Organization
Restaurant Brands International Inc. (the “Company”, “RBI”, “we”, “us” or “our”) is a Canadian corporation that serves as the sole general partner of Restaurant Brands International Limited Partnership (“Partnership”). We franchise and operate quick service restaurants serving premium coffee and other beverage and food products under the Tim Hortons® brand (“Tim Hortons” or “TH”), fast food hamburgers principally under the Burger King® brand (“Burger King” or “BK”), chicken principally under the Popeyes® brand (“Popeyes” or “PLK”) and sandwiches under the Firehouse Subs® brand (“Firehouse” or “FHS”). We are one of the world’s largest quick service restaurant, or QSR, companies as measured by total number of restaurants. As of September 30, 2022, we franchised or owned 5,405 Tim Hortons restaurants, 19,401 Burger King restaurants, 3,928 Popeyes restaurants and 1,234 Firehouse Subs restaurants, for a total of 29,968 restaurants, and operate in more than 100 countries. Approximately 100% of current system-wide restaurants are franchised.
All references to “$” or “dollars” are to the currency of the United States unless otherwise indicated. All references to “Canadian dollars” or “C$” are to the currency of Canada unless otherwise indicated.
Note 2. Basis of Presentation and Consolidation
We have prepared the accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, the Financial Statements should be read in conjunction with the audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC and Canadian securities regulatory authorities on February 23, 2022.
The Financial Statements include our accounts and the accounts of entities in which we have a controlling financial interest, the usual condition of which is ownership of a majority voting interest. Investments in other affiliates that are owned 50% or less where we have significant influence are accounted for by the equity method. All material intercompany balances and transactions have been eliminated in consolidation.
We are the sole general partner of Partnership and, as such we have the exclusive right, power and authority to manage, control, administer and operate the business and affairs and to make decisions regarding the undertaking and business of Partnership, subject to the terms of the amended and restated limited partnership agreement of Partnership (the “partnership agreement”) and applicable laws. As a result, we consolidate the results of Partnership and record a noncontrolling interest in our condensed consolidated balance sheets and statements of operations with respect to the remaining economic interest in Partnership we do not hold.
We also consider for consolidation entities in which we have certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. Our maximum exposure to loss resulting from involvement with VIEs is attributable to accounts and notes receivable balances, outstanding loan guarantees and future lease payments, where applicable.
As our franchise and master franchise arrangements provide the franchise and master franchise entities the power to direct the activities that most significantly impact their economic performance, we do not consider ourselves the primary beneficiary of any such entity that might be a VIE.
10

Tim Hortons has historically entered into certain arrangements in which an operator acquires the right to operate a restaurant, but Tim Hortons owns the restaurant’s assets. We perform an analysis to determine if the legal entity in which operations are conducted is a VIE and consolidate a VIE entity if we also determine Tim Hortons is the entity’s primary beneficiary (“Restaurant VIEs”). As of September 30, 2022 and December 31, 2021, we determined that we are the primary beneficiary of 44 and 46 Restaurant VIEs, respectively, and accordingly, have consolidated the results of operations, assets and liabilities, and cash flows of these Restaurant VIEs in our Financial Statements. Material intercompany accounts and transactions have been eliminated in consolidation.
In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements. The results for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the full year.
The preparation of consolidated financial statements in conformity with U.S. GAAP and related rules and regulations of the SEC requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates.
The carrying amounts for cash and cash equivalents, accounts and notes receivable and accounts and drafts payable approximate fair value based on the short-term nature of these amounts.
Certain prior year amounts in the accompanying Financial Statements and notes to the Financial Statements have been reclassified in order to be comparable with the current year classification. These consist of the reclassification of technology fee revenues from Franchise and property revenues to Advertising revenues and other services of $4 million and $6 million for the three and nine months ended September 30, 2021 and technology expenses from General and administrative expenses to Advertising expenses and other services of $8 million and $14 million for the three and nine months ended September 30, 2021, respectively. These reclassifications did not arise as a result of any changes to accounting policies and relate entirely to presentation with no effect on previously reported net income.
Note 3. New Accounting Pronouncements
Accounting Relief for the Transition Away from LIBOR and Certain other Reference Rates – In March 2020 and as clarified in January 2021, the Financial Accounting Standards Board (“FASB”) issued guidance which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This amendment is effective as of March 12, 2020 through December 31, 2022. The expedients and exceptions provided by this new guidance do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationships. During the third quarter of 2021, we adopted certain of the expedients as it relates to hedge accounting as certain of our debt agreements and hedging relationships bear interest at variable rates, primarily U.S. dollar LIBOR. The adoption of and future elections under this new guidance did not and are not expected to have a material impact on our Financial Statements. We will continue to monitor the discontinuance of LIBOR on our debt agreements and hedging relationships.
Lessors—Certain Leases with Variable Lease Payments – In July 2021, the FASB issued guidance that requires lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if (a) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with lease classification criteria and (b) the lessor would have otherwise recognized a day-one loss. This amendment is effective in 2022 with early adoption permitted. This guidance may be applied either retrospectively to leases that commenced or were modified on or after the adoption of lease guidance we adopted in 2019 or prospectively to leases that commence or are modified on or after the date that this new guidance is applied. The adoption of this new guidance during the first quarter of 2022 did not have a material impact on our Financial Statements.
11

Liabilities—Supplier Finance Programs – In September 2022, the FASB issued guidance that requires buyers in a supplier finance program to disclose sufficient information about the program to allow investors to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. These disclosures would include the key terms of the program, as well as the obligation amount that the buyer has confirmed as valid to the third party that is outstanding at the end of the reporting period, a rollforward of that amount, and a description of where that amount is presented in the balance sheet. This amendment is effective in 2023, except for the amendment on rollforward information which is effective in 2024, with early adoption permitted. This guidance should be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively. We are currently evaluating the impact that the adoption of this new guidance will have on our Financial Statements and will add necessary disclosures upon adoption.
Note 4. Firehouse Acquisition
We acquired Firehouse Subs on December 15, 2021 (the “Firehouse Acquisition”) which complements RBI's existing portfolio. Like RBI's other brands, the Firehouse Subs brand is managed independently, while benefiting from the global scale and resources of RBI. The Firehouse Acquisition was accounted for as a business combination using the acquisition method of accounting.
Total consideration in connection with the Firehouse Acquisition was $1,016 million. The consideration was funded through cash on hand and $533 million of incremental borrowings under our senior secured term loan facility.
Fees and expenses related to the Firehouse Acquisition and related financings totaled approximately $1 million during the nine months ended September 30, 2022, consisting of professional fees and compensation related expenses which are classified as general and administrative expenses in the accompanying condensed consolidated statements of operations.
During the nine months ended September 30, 2022, we adjusted our preliminary estimate of the fair value of net assets acquired. The preliminary allocation of consideration to the net tangible and intangible assets acquired is presented in the table below (in millions):
December 15, 2021
Total current assets$21 
Property and equipment4 
Firehouse Subs brand
816 
Franchise agreements19 
Operating lease assets9 
Total liabilities(48)
Total identifiable net assets821 
Goodwill195 
Total consideration$1,016 

12

The adjustments to the preliminary estimate of net assets acquired and a decrease in total consideration resulted in a corresponding decrease in estimated goodwill due to the following changes to preliminary estimates of fair values and allocation of purchase price (in millions):
Increase (Decrease) in Goodwill
Change in:
Operating lease assets$(9)
Firehouse Subs brand
(48)
Franchise agreements(19)
Total liabilities35 
Total consideration(17)
   Total decrease in goodwill$(58)
The purchase price allocation reflects preliminary fair value estimates based on management's analysis, including preliminary work performed by third-party valuation specialists. We will continue to obtain information to assist in determining the fair value of net assets acquired during the measurement period.
The Firehouse Subs brand has been assigned an indefinite life and, therefore, will not be amortized, but rather tested annually for impairment. Franchise agreements have a weighted average amortization period of 18 years. Goodwill attributable to the Firehouse Acquisition will be amortized and deductible for tax purposes. Goodwill is considered to represent the value associated with the workforce and synergies anticipated to be realized as a combined company. We have not yet allocated goodwill related to the Firehouse Acquisition to reporting units for goodwill impairment testing purposes. Goodwill will be allocated to reporting units when the purchase price allocation is finalized during the measurement period.
The results of operations of Firehouse Subs have been included in our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022. The Firehouse Acquisition is not material to our unaudited condensed consolidated financial statements, and therefore, supplemental pro forma financial information for 2021 related to the acquisition is not included herein.

Note 5. Leases
Property revenues consist primarily of lease income from operating leases and earned income on direct financing leases and sales-type leases with franchisees as follows (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Lease income - operating leases
Minimum lease payments$100 $113 $314 $343 
Variable lease payments112 91 291 241 
Amortization of favorable and unfavorable income lease contracts, net 1 1 3 
Subtotal - lease income from operating leases212