What is the difference in the accumulated depreciation for Churchs Chicken from the previous year to the current year?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
0.jpeg)
| Land | $ | 74,741 | $ | 76,754 |
|---|---|---|---|---|
| Buildings and improvements | 40,012 | 36,513 | ||
| Equipment | 25,175 | 21,716 | ||
| Construction-in-progress | 1,402 141,330 | 2,198 137,181 | ||
| Less accumulated depreciation | (21 |
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 35–43)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, the accumulated depreciation related to property and equipment changed between December 25, 2022, and December 31, 2023. Specifically, the accumulated depreciation was ($11,458) as of December 25, 2022, and increased to ($21,288) as of December 31, 2023. This represents an increase of ($9,830) in accumulated depreciation year-over-year.
Accumulated depreciation is the total amount of depreciation expense that has been recognized for an asset over its useful life. It reflects the wearing out, consumption, or obsolescence of assets like land, buildings, and equipment. The increase in accumulated depreciation suggests that Churchs Chicken recognized more depreciation expense in 2023 than in 2022. This could be due to new asset purchases, changes in depreciation methods, or a reassessment of the useful lives of existing assets.
For a prospective franchisee, understanding accumulated depreciation is crucial because it impacts the net book value of assets. A higher accumulated depreciation reduces the net book value, which can affect the franchisee's balance sheet and financial ratios. Additionally, depreciation expense is a non-cash expense that affects the franchisee's profitability. Therefore, it's important to consider the impact of depreciation on the overall financial performance of the franchise.
It is important to note that this depreciation only reflects the depreciation of assets held directly by the franchisor, not by individual franchisees. Franchisees will also have their own depreciation expenses related to the equipment and leasehold improvements they own. A prospective franchisee should inquire about typical capital expenditure and depreciation schedules for a new Churchs Chicken location to forecast their own expenses.