What is the stated useful life for leasehold improvements for 360 Painting?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
3,690 | 1,324,609 | | Prepaid commissions | 1,118,849 | 985,918 | | Other current assets | 75,000 | 161,345 | | Total prepaid expenses and other current assets | $ 3,666,212 | $ 2,486,419 |
5. Property and Equipment
Property and equipment consisted of the following as of December 31, 2024 and 2023:
| Useful Life | 2024 | 2023 | |
|---|---|---|---|
| Office equipment | 3 – 5 years | $ 387,762 | $ 224,403 |
| Software for internal use | 1 – 2 years | 873,991 | 687 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, the stated useful life for leasehold improvements is 5 years. This means that for accounting purposes, 360 Painting depreciates the value of any leasehold improvements (modifications or upgrades made to a leased property) over a 5-year period.
For a prospective franchisee, understanding the useful life of assets like leasehold improvements is important for financial planning and tax purposes. The depreciation expense associated with these improvements can impact the franchisee's profitability and tax liability. Leasehold improvements typically include things like interior painting, flooring, or modifications to adapt the space for the 360 Painting business.
The FDD also lists the useful life for office equipment as 3-5 years and software for internal use as 1-2 years. Knowing the depreciation schedule for different types of assets helps a franchisee understand how these assets will impact their financial statements over time. It's a standard accounting practice to depreciate assets over their useful life, reflecting the gradual decline in their value.
In 2024, 360 Painting had $125,883 in leasehold improvements, and $322,751 in 2023. These figures, along with the stated useful life, provide insight into the company's investment in physical assets and how these assets are accounted for on their balance sheet. A potential franchisee can use this information to better understand the financial health and accounting practices of 360 Painting.