What is the range of estimated useful lives over which Brain Balance depreciates its assets?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment are recorded at cost. The straight-line method is used for computing depreciation and amortization. Assets are depreciated over their estimated useful lives ranging from three to five years. The cost of leasehold improvements is depreciated over the lesser of the length of the related leases or the estimated useful lives of the assets. Costs of maintenance and repairs are charged to expense when incurred.
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, the company uses the straight-line method to depreciate and amortize its property and equipment over an estimated useful life of three to five years. Leasehold improvements are depreciated over the shorter of the lease term or the asset's useful life.
This means that when a Brain Balance franchisee purchases assets for their center, such as equipment or furniture, they can deduct a portion of the cost each year as a depreciation expense for tax purposes. The exact amount that can be deducted each year depends on the asset's cost, its estimated useful life (between three and five years), and whether it is a leasehold improvement.
For example, if a franchisee spends $15,000 on equipment, the annual depreciation expense would be $5,000 if the useful life is three years, or $3,000 if the useful life is five years. This depreciation expense can help reduce the franchisee's taxable income and overall tax liability during the early years of operation. It is important to note that the franchisee should consult with a tax professional to determine the appropriate depreciation method and useful life for their specific assets.