Are advertising and marketing costs for Dermani Medspa expensed as incurred or capitalized?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
ting from the failure of franchisees to make required payments. The Company reviews the receivable balance on a periodic basis and makes allowances when there is a substantial doubt as to the collectability of individual balances. The evaluation process inc
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, advertising costs are expensed as incurred. This means that Dermani Medspa recognizes the expense in the period that it is incurred rather than capitalizing it and depreciating it over time. For the year ended December 31, 2023, the advertising expense was $161,105, while for the year ended December 31, 2022, it was $217,280. These expenses are made at the company's discretion.
This accounting treatment is typical for advertising costs in many industries, including franchising. Expensing advertising costs as incurred provides a more straightforward reflection of the company's financial performance in each period. It also means that franchisees will not see these costs being amortized on the balance sheet.
In addition to these general advertising expenses, Dermani Medspa also has a System Marketing Fund. The System Marketing Fund is used for the enhancement and protection of the Dermani Medspa brand and marks, and for advertising, marketing, and public relations programs and materials. The fund is not Dermani Medspa's asset, and contributions are held for the benefit of the System, the dermani MEDSPA® brand, and the contributors. Dermani Medspa prepares an annual, unaudited statement of System Marketing Fund collections and expenses, which is available for review upon written request 120 days after the fiscal year-end.