For a Cinnabon franchise, what determines the depreciation timeframe for leasehold improvements?

According to the 2025 Cinnabon Franchise Disclosure Document, depreciation for property, equipment, and leasehold improvements is calculated using a straight-line method based on their estimated useful lives. This means the cost of these assets is spread evenly over their expected lifespan.

The FDD states that property, equipment, and leasehold improvements are recorded at cost, less accumulated depreciation. This indicates that as these assets are used over time, their value decreases, and this decrease is reflected in the financial statements through depreciation. Major renewals and improvements that extend the useful lives of the assets are capitalized, meaning their cost is added to the asset's value and depreciated over the extended life. Normal maintenance and repairs, however, are expensed as incurred, meaning they are deducted from revenue in the period they occur.

For a prospective Cinnabon franchisee, understanding the depreciation timeframe is crucial for financial planning and forecasting. It affects the franchisee's taxable income and the overall profitability of the business. By using the straight-line method, Cinnabon provides a consistent and predictable way to account for the depreciation of these assets, which can help franchisees manage their finances more effectively. The specific estimated useful lives for different types of assets are not provided in this excerpt, so a franchisee should confirm those details with Cinnabon.