How does Bath Tune Up account for advertising production costs?

According to Bath Tune Up's 2025 Franchise Disclosure Document, the company expenses advertising production costs the first time the advertising takes place. This means that Bath Tune Up does not capitalize these costs and amortize them over a period of time. Instead, the full cost is recognized as an expense in the period it is incurred.

For the year ending December 31, 2022, Bath Tune Up incurred $345,219 in consumer and franchise advertising costs. These costs are included in selling and advertising expenses on the company's statement of earnings.

This accounting practice provides transparency into Bath Tune Up's current financial performance, as all advertising expenses are immediately reflected. For a prospective franchisee, this means that the financial statements will accurately portray the advertising expenses incurred during a specific period, which can be useful in evaluating the company's profitability and marketing efforts. It is important to note that this accounting method can cause fluctuations in reported earnings, especially during periods of increased advertising activity.