Are C12 Group's advertising costs expensed or capitalized?

According to C12 Group's 2025 Franchise Disclosure Document, advertising costs are expensed as incurred. This means that C12 Group recognizes the expense in the same period that it spends the money on advertising, rather than capitalizing it as an asset and depreciating it over time. The FDD also notes that these advertising costs are considered insignificant.

For a prospective C12 Group franchisee, this accounting practice has implications for understanding the company's financial statements. Because advertising costs are expensed immediately, they directly impact the company's profitability in the period they are incurred. If C12 Group were to capitalize these costs instead, it would spread the expense over a longer period, potentially showing higher profits in the short term but lower profits in later periods as the capitalized costs are amortized.

The fact that C12 Group considers these costs insignificant suggests that advertising expenses do not materially affect the company's financial performance. However, franchisees should still be aware of this accounting policy when reviewing C12 Group's financial statements, as it provides insight into how the company manages and reports its expenses. Understanding this policy helps franchisees better assess the true profitability and financial health of C12 Group.