For Annex Brands, how is the amortization of leasehold improvements computed?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
Equipment, which includes furniture and fixtures, and leasehold improvements are stated at cost. Depreciation on equipment is calculated using the straight-line method over the estimated useful lives of the assets ranging from two to seven years. The amortization of leasehold improvements is computed using the straight-line method over the shorter of the lease term or the estimated useful life of the asset.
Source: Item 21 — Financial Statements (FDD page 109)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, the amortization of leasehold improvements is calculated using the straight-line method. This calculation is based on the shorter of either the lease term or the estimated useful life of the asset.
For a prospective Annex Brands franchisee, this means that the cost of any improvements made to the leased property for their franchise location will be spread out evenly over the duration of the lease or the estimated life of the improvement, whichever is shorter. The straight-line method provides a consistent and predictable expense each period, which can help with financial planning and budgeting.
It is important for franchisees to understand the terms of their lease and the estimated useful lives of any leasehold improvements they make. This will directly impact the amount of amortization expense recognized each year, affecting the franchise's profitability. Franchisees should consult with a financial professional to determine the best approach for their specific situation and to ensure accurate financial reporting.