Under what circumstance does Beef O Bradys expense debt issuance costs in full?

According to Beef O Bradys's 2025 Franchise Disclosure Document, debt issuance costs are expensed in full when the related debt is extinguished. This means that Beef O Bradys defers the costs incurred to secure financing arrangements and amortizes them over the term of the related agreement.

Beef O Bradys uses the straight-line method for amortizing these costs, which approximates the effective interest method. Debt issuance costs related to notes payable are recorded as a reduction of the note liability, while costs related to the revolving credit facility are included with other assets on the consolidated balance sheets.

For a prospective Beef O Bradys franchisee, this accounting treatment means that the initial costs of securing financing are not immediately recognized as an expense. Instead, they are spread out over the life of the debt, impacting the company's profitability gradually. However, if the debt is paid off or otherwise extinguished before the end of its term, the remaining unamortized debt issuance costs are immediately expensed, which could result in a larger expense in that period.