What was the cost of organization costs for Exit franchisees as of December 31, 2024?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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 |
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 for franchisees are capitalized and amortized over 15 years. As of December 31, 2024, the original cost of organization was $7,062, with accumulated amortization of $4,749, resulting in a net carrying value of $2,313.
This means that when Exit initially set up its business, it incurred $7,062 in costs such as legal fees. These costs are not immediately expensed but are instead treated as an asset on the balance sheet and gradually written off over 15 years. The $4,749 represents the portion of these initial costs that have already been expensed as of the end of 2024. The remaining $2,313 is the unamortized portion that will be expensed in future years.
For a prospective Exit franchisee, this accounting treatment is not directly relevant to their initial investment or ongoing expenses. However, it provides insight into how Exit manages its own finances and amortizes its initial organizational expenses over a 15-year period. Understanding these accounting practices can help franchisees assess the financial stability and management practices of the franchisor.