What is the useful life for the franchise relationships intangible asset for Benjamin Franklin Plumbing?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
| Estimated Useful Life | Gross Amount | Accumulated Amortization | Impairment | Net Amount | Weighted Average Remaining Useful Life | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Franchise relationships(2) | 15 years | 353,475 | 133,282 | 842 | 219,351 | 9.4 |
Intangible assets consist of trademarks, franchise relationships, software, proprietary processes, and noncompetition agreements. Intangible assets are stated at their estimated fair value at the date of acquisition. Amortization is computed over the estimated useful lives of the related intangible assets using the straight-line method.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, the estimated useful life for franchise relationships is 15 years. As of December 31, 2024, the gross amount of franchise relationships was valued at $353,475, with accumulated amortization of $133,282 and an impairment of $842, resulting in a net amount of $219,351. The weighted average remaining useful life was 9.4 years.
For a prospective franchisee, this means that the initial franchise fee paid to Benjamin Franklin Plumbing is treated as an intangible asset that is amortized over a 15-year period for accounting purposes. Amortization is a method of spreading the cost of an intangible asset over its useful life, reflecting the gradual decline in its value. The remaining useful life indicates how many years of value are left in the asset.
The difference between the gross amount and the accumulated amortization and impairment provides the net value of the franchise relationship asset on the balance sheet. The weighted average remaining useful life of 9.4 years suggests that, on average, existing franchise relationships have been in place for about 5.6 years (15 years - 9.4 years). This information is useful for understanding how Benjamin Franklin Plumbing values and accounts for its franchise agreements over time.
Intangible assets like franchise relationships are stated at their estimated fair value at the date of acquisition. Amortization is calculated using the straight-line method over the estimated useful lives of the related intangible assets. This accounting treatment is standard practice and provides a consistent way to measure the value of these assets over their lifespan.