What is the amortization amount for Exit's goodwill for the year ending December 31, 2026?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company has recorded goodwill associated with the acquisition of Legacy Success Group, LLC on January 1, 2018. During the year ended December 31, 2020, the Company assigned an additional $6,250 to goodwill in relation to the purchase agreement. The goodwill is associated with Legacy Success Group, LLC's reputation within its respective industry, totaling $24,973. The Company began to amortize it over a ten-year period effective January 1, 2018. Management has determined that there has been no impairment related to this goodwill for the years ended December 31, 2024, 2023, and 2022. Amortization expense totaled $2,914 for the years ended December 31, 2024, 2023, and 2022, respectively.
| For the Years Ending December 31 | Amount | |
|---|---|---|
| 2025 | $ 2,914 | |
| 2026 | 2,914 | |
| 2027 | 2,917 | |
| 2028 | 417 | |
| 2029 | 417 |
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the estimated amortization expense for goodwill for the year ending December 31, 2026, is $2,914. This amortization relates to goodwill associated with the acquisition of Legacy Success Group, LLC, which Exit acquired on January 1, 2018. An additional $6,250 was assigned to goodwill during the year ended December 31, 2020, in relation to the purchase agreement. The total goodwill associated with Legacy Success Group, LLC's reputation within its industry is $24,973. Exit began amortizing this goodwill over a ten-year period starting January 1, 2018. Management determined that there was no impairment related to this goodwill for the years ended December 31, 2024, 2023, and 2022.
For a prospective Exit franchisee, understanding goodwill amortization is crucial because it affects the company's financial statements and profitability. Goodwill represents the intangible assets acquired in a business acquisition, such as brand reputation and customer relationships. Amortizing goodwill means systematically expensing its value over its useful life, which in Exit's case is ten years. This expense reduces the company's reported profit, which can impact investor perceptions and the overall financial health of the franchise system.
The FDD also states that in accordance with update 2014-02 to the FASB Accounting Standards Codification (ASC) 350, Intangibles – Goodwill and Other, the Company has elected to apply the accounting alternative for goodwill. The accounting alternative allows an entity to take goodwill relating to each business combination or reorganization event resulting in fresh-start reporting (amortizable unit of goodwill) and amortize it on a straight-line basis over ten years, or less than ten years if the Company demonstrates that another useful life is more appropriate. Goodwill of the Company (or a reporting unit) shall be tested for impairment if an event occurs, or circumstances change that indicates the fair value of the Company (or the reporting entity) may be below its carrying amount.