What is the amortization period for franchisor development costs for Burros Fries?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
g the year ended December 31, 2022.
NOTE 2 – INTANGIBLE ASSETS
The Company incurred franchisor development costs during 2020. This consists of services required by the Company to create a comprehensive franchise program and includes legal fees, development of franchise documents, marketing and filing services. Completed costs are $21,875. Accumulated amortization at December 31, 2022 is $3,888.
The amortization for development costs is 15 years. Amortization expense for the year ended December 31, 2022 was $1,458. Estimated future five-year amortization expense for
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, the amortization period for the franchisor's development costs is 15 years. These costs, which totaled $21,875, were incurred in 2020 and consist of services required to create a comprehensive franchise program. This includes legal fees, development of franchise documents, marketing, and filing services.
For a prospective Burros Fries franchisee, understanding the amortization period is crucial for assessing the franchisor's financial strategies. Amortization is a method of spreading the cost of an intangible asset over its useful life, and in this case, Burros Fries is spreading its initial franchise development costs over 15 years. This affects the company's financial statements and can provide insights into how the company manages its investments and expenses.
The annual amortization expense for these development costs was $1,458 as of December 31, 2022. The estimated future five-year amortization expense is also $1,458 per year, totaling $7,290. This consistent amortization expense provides a predictable financial impact over the next five years, which can be a factor in assessing the financial stability and planning of Burros Fries.