How does Bw Premier Collection amortize leasehold improvements?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
Property, equipment and computer software and hotel investments are recorded at cost. Costs of improvements that extend the economic life or improve service potential are also capitalized. Depreciation on land improvements, buildings, and furniture and equipment is computed using straight-line and accelerated methods over estimated useful lives ranging from 3 to 39 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the related lease term or the estimated useful lives of the assets.
Source: Item 23 — Receipts (FDD pages 54–203)
What This Means (2025 FDD)
According to Bw Premier Collection's 2025 Franchise Disclosure Document, leasehold improvements are amortized using the straight-line method. This means the cost of the improvements is evenly spread out over a specific period.
The amortization period for Bw Premier Collection is determined by whichever is shorter: the length of the lease term or the estimated useful life of the improvements. For example, if a franchisee makes $10,000 in leasehold improvements and the lease is for 5 years, but the estimated useful life of the improvements is 10 years, the franchisee would amortize the $10,000 over 5 years, resulting in an annual amortization expense of $2,000.
This approach is fairly standard in the franchise industry. Using the straight-line method provides a consistent and predictable expense each year, which can help with financial planning. Franchisees should carefully consider the lease term and estimated useful lives of improvements to accurately account for these expenses.