Are the advertising costs associated with soliciting new franchisees for Basecamp Fitness capitalized or expensed?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
suance Costs**
The Company defers debt issuance costs, which consist primarily of bank and legal fees. Such costs are related to the note payable and revolving credit facility as described in Note 5 and are amortized over the terms of
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, advertising costs related to soliciting new franchisees are expensed as they are incurred. In 2024, these advertising costs totaled $1,126,000. In 2023, the costs were $1,442,000, and in 2022, they amounted to $1,240,000.
For a prospective Basecamp Fitness franchisee, this accounting practice means that the franchisor recognizes these advertising expenses immediately rather than capitalizing them and spreading the cost over a period of time. This provides a more transparent view of the company's current financial performance.
This approach is fairly standard in the franchise industry, as advertising expenses are generally considered to provide immediate benefits rather than long-term assets. Franchisees should be aware of these figures as they reflect the franchisor's investment in expanding the Basecamp Fitness network, which can indirectly benefit existing franchisees through increased brand recognition.