For Exit, what method is used to 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 amortized using the straight-line method. This means the cost of the improvements is evenly spread out over their useful life or the lease term, whichever is shorter. The lease term generally includes renewal options that are reasonably expected to be exercised.
For Exit, the amortization expense for leasehold improvements was $30,667 for the years ending December 31, 2024, 2023, and 2022. The estimated remaining useful life of these improvements is 38 months. This consistent expense suggests a stable and predictable accounting treatment for these assets.
This accounting practice is fairly standard in the franchise industry. Using the straight-line method provides a consistent and simple way to account for the depreciation of these assets. Franchisees should be aware of how leasehold improvements are treated, as it affects their financial statements and tax obligations. Understanding the amortization schedule helps in forecasting expenses and managing the financial health of the franchise.