How are leasehold improvements generally amortized for Chesters?

According to Chesters's 2025 Franchise Disclosure Document, leasehold improvements are generally amortized on a straight-line basis. This means the cost of the improvements is evenly spread out over a specific period.

The amortization period is determined by whichever is shorter: the length of the lease term or the estimated useful life of the improvement. 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 7 years, the franchisee would amortize the $10,000 over 5 years. Conversely, if the lease was for 7 years and the useful life was 5 years, the amortization would occur over the 5-year period.

This accounting practice allows Chesters and its franchisees to systematically expense the cost of these improvements over time, reflecting their gradual consumption or use in generating revenue. Franchisees should consult with a financial professional to ensure they properly account for these expenses.