How does Beef O Bradys handle the costs of purchasing transferable liquor licenses?

According to Beef O Bradys's 2025 Franchise Disclosure Document, the costs associated with acquiring liquor licenses depend on the type and transferability of the license. If a Beef O Bradys franchisee purchases a transferable liquor license in a jurisdiction where the number of licenses is limited, these costs are capitalized, meaning they are recorded as an asset on the company's balance sheet because the license has an indefinite useful life. This approach reflects the long-term value that the license provides to the business.

However, Beef O Bradys handles the costs differently for non-transferable liquor licenses. If a franchisee obtains a non-transferable license directly from local government agencies and pays only nominal fees, these costs are expensed as incurred. This means the cost is recognized immediately on the income statement rather than being capitalized as an asset. This is because the license is not transferable and the fees are minimal.

Additionally, annual liquor license renewal fees are treated as expenses and are recognized over the renewal term. This means that the cost of renewing the license each year is spread out over the period that the license is valid, providing a more accurate reflection of the ongoing cost of maintaining the license. This accounting practice ensures that Beef O Bradys appropriately values and accounts for liquor licenses, which are essential for many of its franchise locations.