How does Beard Papas amortize leasehold improvements?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed by a straight-line or double declining method over the estimated useful lives of the related assets of between 5 and 10 years. Leasehold improvements are amortized on a straight-line method over the term of the lease or estimated useful life, whichever is shorter.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, leasehold improvements are amortized using the straight-line method. This means the cost of the improvements is evenly spread out over either the term of the lease or the estimated useful life of the improvement, whichever period is shorter.
This approach is fairly standard in the franchise industry, as it provides a consistent and predictable expense each period. For a Beard Papas franchisee, this means that the cost of any improvements made to the leased space for their shop will be deducted in equal amounts over the lease term or the asset's useful life, impacting the shop's profitability each year.
The FDD also mentions that property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation for property and equipment is calculated using either the straight-line or double-declining method over an estimated useful life of 5 to 10 years. This indicates that Beard Papas uses different depreciation methods for different types of assets, providing flexibility in accounting for the wear and tear of various assets.