How are leasehold improvements depreciated by Buildingstars?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed primarily on the straight-line method over the estimated useful lives of the assets, ranging from three to ten years. Leasehold improvements are depreciated over the term of the lease.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 34–43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, the company depreciates leasehold improvements over the term of the lease. This means that the cost of any improvements made to a leased property is spread out as an expense over the duration of the lease agreement.
For a prospective Buildingstars franchisee, this is relevant if they lease a property and make improvements to it. Instead of deducting the entire cost of the improvements in one year, they would deduct a portion of the cost each year over the life of the lease. This can affect the franchisee's taxable income and financial statements during the lease term.
The FDD also states that Buildingstars uses the straight-line method for depreciation of property and equipment, with useful lives ranging from three to ten years. While this applies to property and equipment, leasehold improvements are specifically depreciated over the lease term, which may be a different period than the standard three to ten years.