What costs primarily constitute the software and digital platform expenses for Bft?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment, net – Property and equipment includes software and digital platform and are carried at cost less accumulated depreciation. Depreciation is recognized on a straight-line method, based on the following estimated useful lives:
Software and digital platform 3-5 years
Software and digital platform consist primarily of costs associated with web development projects. The Company capitalizes eligible costs to acquire, develop, or modify digital platforms that are incurred subsequent to the preliminary project stage. Depreciation of these assets begins upon the initial usage of the digital platforms.
The cost and accumulated depreciation of assets sold or retired are removed from the accounts and any gain or loss is included in the results of operations during the period of sale or disposal.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the software and digital platform expenses primarily consist of costs associated with web development projects. Bft capitalizes eligible costs incurred after the preliminary project stage to acquire, develop, or modify digital platforms. These capitalized costs are then depreciated using the straight-line method over an estimated useful life of 3 to 5 years.
For a prospective franchisee, this means that a portion of their initial investment will be allocated to the development and maintenance of the digital infrastructure necessary to operate the Bft franchise. The costs are not expensed immediately but are spread out over several years through depreciation, which can impact the studio's profitability in the short term. The FDD indicates that Bft begins depreciating these assets upon the initial usage of the digital platforms.
It's important to note that if Bft sells or retires any of these assets, the cost and accumulated depreciation are removed from the accounts, and any gain or loss is included in the results of operations during that period. Additionally, in 2024, Bft recorded an impairment of $2,233 related to a software asset due to a lack of established cash flows, which highlights the risk that software assets may not always retain their value. Franchisees should inquire about the specific types of web development projects included and the expected lifespan and performance of these digital platforms to better understand the ongoing value and potential risks associated with these assets.