How does Boulder Designs determine the cost of promotional apparel and supplies included in inventory?

According to Boulder Designs' 2025 Franchise Disclosure Document, the cost of promotional apparel and supplies sold to franchisees is determined based on the average cost, calculated on a rolling average basis. This valuation method is part of Boulder Designs' overall accounting policies for inventory. The inventory also includes equipment, which is valued at the lower of cost or net realizable value.

For a prospective Boulder Designs franchisee, this means that the price they pay for promotional apparel and supplies will reflect the average cost of these items over a recent period. The rolling average method smooths out price fluctuations, preventing franchisees from being unduly affected by short-term cost spikes. This approach provides a more stable and predictable cost basis for these inventory items.

It's important to note that while the cost of promotional apparel and supplies is based on a rolling average, the cost of equipment is determined using the specific cost method. This means that the actual cost of each piece of equipment is tracked individually. This difference in valuation methods may reflect the different nature and turnover rates of these two types of inventory. Franchisees should be aware of these accounting policies as they manage their inventory and financial planning.