What is the total amortization expense recognized for Embassy Suites?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| (in thousands) | |
|---|---|
| Contract acquisition costs $ 376,063 $ (69,820) $ 306,243 | |
| Franchise contract intangible assets acquired 85,304 (3,317) 81,987 | |
| Costs to obtain contracts 7,259 (2,741) 4,518 | |
| $ 468,626 $ (75,878) $ 392,748 | |
| Contract acquisition costs $ 287,958 $ (54,374) $ 233,584 | |
| Costs to obtain contracts 7,256 (2,307) 4,949 | |
| $ 295,214 $ (56,681) $ 238,533 | |
| Recognized as a reduction of franchise royalty fees $ 16,053 $ 12,897 $ 11,972 | |
| Recognized in amortization expense 3,751 414 410 |
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, amortization expenses are recognized for various assets. Specifically, $3,751 is recognized for contract acquisition costs, $414 for franchise contract intangible assets acquired, and $410 for costs to obtain contracts. These figures are not explicitly labeled as 'total' amortization expense, but they represent the amortization recognized for the listed categories of assets.
For a prospective Embassy Suites franchisee, understanding these amortization expenses is crucial for assessing the financial performance and valuation of the franchise. Amortization is the systematic allocation of the cost of an intangible asset over its useful life. In this context, it reflects the expense recognized each period as the value of these assets (contract acquisition costs, franchise rights, and costs to obtain contracts) is consumed.
The figures provided are in thousands of dollars. Therefore, the amortization expense for contract acquisition costs is $3,751,000, for franchise contract intangible assets is $414,000, and for costs to obtain contracts is $410,000. These expenses impact the net income of the franchise, and franchisees should consider these when projecting their financial performance.
It is important for potential franchisees to review the complete financial statements and related notes in the FDD to fully understand the nature of these intangible assets and the methods used to amortize them. Additionally, consulting with a financial advisor can provide further clarity on the implications of these expenses for the franchisee's specific circumstances.