What was the cost of Exit's organization costs as of December 31, 2024?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
sification adjustment for net losses included in | | | | | net losses | $ - | $ 425 | $ - | | December 31, 2024 Period | | Cost | Amortization | Value | |---|---|---|---|---| | Franchise territories 10 years | $ 838,959 | | $ (111,458) | $ 727,501 | | Organization costs 15 years | 7,062 | (4,749) | 2,313 | | | Total | $ 846,021 | | $ (116,207) | $ 729,814 | | December 31, 2023 | | | | | | Franchise territories 10 years | $ 838,959 | | $ (27,862) | $ 811,097 | | Organization costs 15 years | 7,062 | (4,279) | 2,783 | | | Total | $ 846,021 | | $ (32,141) | $ 813,880 | | December 31, 2022 | | | | | | Franchise territories 8-15 years | $ 4,089,613 | | $ (2,097,776) | $ 1,991,837 | | Organization costs 15 years | 7,062 | (3,808
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the initial organization costs were $7,062. As of December 31, 2024, the accumulated amortization was $4,749, resulting in a net carrying value of $2,313. These costs are amortized over 15 years.
Organization costs typically include expenses incurred when setting up the legal entity of the franchise, such as legal fees, filing fees, and other administrative costs. Amortization is the process of spreading the cost of an intangible asset over its useful life. In this case, Exit amortizes its organization costs over 15 years, meaning that a portion of the initial $7,062 is recognized as an expense each year.
For a prospective Exit franchisee, understanding the amortization schedule of such costs is important for financial planning and forecasting. It allows the franchisee to anticipate the annual expense related to these initial costs and factor it into their operating budget. The table also shows figures for previous years, which can give a sense of how these costs have been treated historically.
It's worth noting that while the initial organization costs are relatively small, other costs, such as franchise territory fees, are significantly larger. Therefore, franchisees should pay attention to all components of their initial investment and ongoing expenses to accurately assess the financial viability of the franchise.