Over what term are Chesters' non-compete agreements amortized?

According to Chesters's 2025 Franchise Disclosure Document, non-compete agreements are amortized over the term of the agreement, which is either 24 months or 36 months. Amortization is an accounting practice of spreading the cost of an intangible asset over its useful life. In this case, the intangible asset is the non-compete agreement.

For a prospective Chesters franchisee, this means that the cost Chesters incurs to establish these non-compete agreements is recognized as an expense over either a 24-month or 36-month period. This accounting treatment reflects the period during which the non-compete agreement is effective and provides a financial benefit to Chesters by protecting its market and proprietary information.

It is important to note that the specific term (24 or 36 months) will depend on the individual agreement. Franchisees should review their specific franchise agreement to understand the exact terms of the non-compete and its amortization period. This information is typically found in the notes to the financial statements within the FDD, which provides additional details on the accounting policies used by Chesters.