How does Exit amortize leasehold improvements?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's policy for charging interest on delinquent receivables varies by terms stated in individual contracts. Accounts receivable are considered past due on an individual client basis.
Property, plant, and equipment
Property, plant, and equipment are stated at cost. Significant additions or improvements extending asset lives are capitalized; normal maintenance and repairs are charged to expense as incurred. Upon retirement or oth
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, leasehold improvements are stated at cost and amortized using the straight-line method. The amortization period is determined by the shorter of either the useful life of the assets or the lease term. The lease term generally includes renewal options that are reasonably expected to be exercised.
For the years ending December 31, 2024, 2023, and 2022, the amortization expense for leasehold improvements was $30,667, $30,666, and $30,667, respectively. As of the FDD's publication, the estimated remaining useful life of these improvements was 38 months.
This means that Exit uses a consistent and predictable method (straight-line) to account for the depreciation of leasehold improvements. Prospective franchisees should consider the remaining useful life of any existing leasehold improvements if they are assuming an existing lease, as this will impact the ongoing amortization expense. Understanding these accounting practices is crucial for managing the financial aspects of an Exit franchise.