What is the estimated remaining useful life of Exit's leasehold improvements, as of the date of this FDD?
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, the estimated remaining useful life of the leasehold improvements is 38 months. Leasehold improvements are amortized using the straight-line method over the shorter of the useful lives of the assets or the lease term, including renewal options that are reasonably expected to be exercised. For the years ending December 31, 2024, 2023, and 2022, the amortization expense was $30,667, $30,666, and $30,667, respectively.
For a prospective Exit franchisee, this means that any leasehold improvements made to their office space will be depreciated over a period of 38 months. This depreciation is a non-cash expense that can be used to reduce taxable income. The consistent amortization expense over the past three years suggests a stable and predictable depreciation schedule for these assets.
It is important to note that the amortization period is based on the shorter of the useful life of the asset or the lease term, including reasonably expected renewal options. Therefore, franchisees should carefully consider the length of their lease and any potential renewal options when making leasehold improvements. This ensures that the amortization schedule aligns with their occupancy of the premises. Franchisees should consult with a financial advisor or accountant to fully understand the tax implications of leasehold improvements and their amortization.