What was the value of the amortized Baymont Inn Suites franchise agreements at the beginning of the period?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
nues | 60 | 25 | 10 | 2 | 97 | | Co-branded credit card program revenues | 22 | — | — | — | 22 | | Other revenues | 22 | 1 | — | 3 | 26 | | Total | $ 121 | $ 34 | $ 17 | $ 118 | $ 290 |
Disaggregation of Net Revenues
The table below presents a disaggregation of the Company's net revenues from contracts with customers by major services and products for each of the Company's segments:
| Year Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||||
| (a) | ||||||
| Hotel Franchising | ||||||
| Royalties and franchise fees | $ 555 | $ 532 | $ 496 | |||
| Marketing and reservation fees | 467 | 487 | 457 | |||
| Loyalty revenue | 96 | 91 | 86 | |||
| Management and other fees | 10 | 14 | — | |||
| License and other fees | 119 | 112 | 100 | |||
| Cost reimbursements | 4 | 13 | — | |||
| (b) | 157 | 148 | 138 | |||
| Oth |
Source: Item 23 — RECEIPTS (FDD pages 97–443)
What This Means (2025 FDD)
According to Baymont Inn Suites's 2025 Franchise Disclosure Document, the company capitalizes certain costs, such as direct and incremental sales commissions, to obtain hotel franchise contracts. These costs are then amortized over the initial non-cancellable period of the agreement, starting when the hotel opens. If an agreement terminates early, any remaining unamortized cost is immediately expensed. The company also capitalizes costs from the sale and installation of property management systems to franchisees, amortizing these over the remaining non-cancellable period of the franchise agreement.
As of December 31, 2023, the capitalized contract costs totaled $68 million. Of this, $4 million was included in other current assets, and $64 million was included in other non-current assets on the company's Consolidated Balance Sheets.
For a potential Baymont Inn Suites franchisee, this indicates that the franchisor invests significantly in acquiring franchise contracts and property management systems, treating these as assets to be depreciated over time. The values provided give a snapshot of the scale of these investments as of the end of 2023. Understanding these accounting practices can help a franchisee better interpret the franchisor's financial statements and assess the long-term financial health of the Baymont Inn Suites franchise system.