For Clear Pest Pros, how are intangible assets subject to amortization stated?

According to Clear Pest Pros's 2025 Franchise Disclosure Document, intangible assets subject to amortization are initially recorded at cost. Subsequently, these assets are amortized using the straight-line method over their estimated useful lives. This means the initial cost of the intangible asset is spread evenly over the period it is expected to generate revenue for Clear Pest Pros.

Clear Pest Pros reviews these intangible assets for potential impairment whenever events or circumstances suggest that their carrying amounts may not be recoverable. This is a standard accounting practice to ensure that the value of assets on the balance sheet reflects their true economic value. If an impairment is identified, the asset's value is written down to its fair value, and a loss is recognized.

For a prospective Clear Pest Pros franchisee, understanding how intangible assets are accounted for is important because it affects the company's financial statements and overall financial health. Amortization expense, as noted in the FDD, was $4,380,000 in 2024 and 2023, and $5,169,000 in 2022. These expenses impact the company's profitability, which can influence decisions about franchise support, investment in technology, and other factors that affect franchisees. Additionally, any significant impairment losses could signal underlying issues with the value or performance of these assets, which could be a red flag for potential investors.