How are finite-lived intangible assets amortized by Batteries Plus Bulbs?

According to the 2025 Batteries Plus Bulbs FDD, finite-lived intangible assets are amortized using the straight-line method over their estimated useful lives. These assets include contractual relationships, proprietary software, and customer relationships. The trade name, however, has an indefinite useful life and is not amortized. Instead, it is assessed for impairment at least annually or when events or conditions suggest it might be impaired.

For a prospective Batteries Plus Bulbs franchisee, this means that certain intangible assets acquired as part of the franchise, such as software or customer lists, will have their value systematically reduced over their estimated useful life. This amortization is a non-cash expense that will affect the franchisee's reported profits. Understanding the estimated useful lives of these assets is important for financial planning and assessing the long-term profitability of the franchise.

The FDD does not specify the exact estimated useful lives for each major classification of intangible assets. Batteries Plus Bulbs uses the straight-line method over the lesser of the asset's life or estimated remaining useful life. This approach is commonly used in accounting because it evenly distributes the cost of the asset over its useful life, providing a consistent and predictable expense each period.

Prospective franchisees should inquire with Batteries Plus Bulbs about the specific estimated useful lives assigned to different categories of intangible assets. This information is crucial for accurately projecting the financial performance of the franchise and understanding the impact of amortization on profitability. Additionally, franchisees should understand the conditions under which indefinite-lived assets like the trade name would be assessed for impairment, as this could lead to a significant one-time expense.