What was the net carrying value of Exit's franchise territories as of December 31, 2024?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
assets, applicable cost and accumulated depreciation or amortization are removed from the accounts. Any gains or losses are included in the determination of the results of operations. Depreciation of furniture and fixtures is determined using the straight-line method over the estimated useful lives of the assets.
The estimated useful lives for significant property and equipment categories are as follows:
Upper Midwest Realty, Inc. d.b.a. Exit Realty Upper Midwest 12 Notes to Financial Statements (continued) December 31, 2024, 2023, and 2022
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Leasehold improvements
Leasehold improvements are stated at cost and amortized using the straight-line method over the shorter of the useful lives of the assets or the lease term, which generally includes renewal options that are reasonably expected to be exercised. Amortization expense was $30,667, $30,666, and $30,667 for the years ended December 31, 2024, 2023, and 2022, respectively. The estimated remaining useful life of the leasehold improvements is 38 months.
Intangible assets
Costs incident to the acquisition of the franchise rights for the client to operate within a designated territory are capitalized. These agreements are being amortized on a straight-line basis over their related terms ranging from eight to fifteen years and are stated at cost net of accumulated amortization. The Company's future cash flows are impacted by its ability to extend or renew agreements related to these intangible assets. Costs incident to the organization of the Company, including legal fees, were capitalized. These expenses are being amortized on a straight-line basis over a period of fifteen years and are stated at cost net of accumulated amortization.
Intangible assets are reviewed annually for impairment or when events or circumstances indicate their carrying amount may not be recoverable.
On September 10, 2023, the Company entered into a 10-year agreement with Exit Realty Corp.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
Based on Exit's 2025 Franchise Disclosure Document, the document does not explicitly state the net carrying value of Exit's franchise territories as of December 31, 2024. However, the FDD does provide information on intangible assets and franchise territory revaluations. Specifically, it mentions that costs related to acquiring franchise rights are capitalized and amortized over terms ranging from eight to fifteen years. The company reviews these intangible assets annually for impairment.
Furthermore, the document includes a table summarizing the revaluation of franchise territories previously recognized, following a 10-year agreement entered on September 10, 2023, with Exit Realty Corp. International. This revaluation includes specific franchise territories such as Illinois, Minnesota, Wisconsin, and Michigan, detailing their balances before restructure, advances, debt reduction, and balances after restructure as of December 31, 2022.
While the document provides details on the accounting policies for intangible assets and the revaluation of specific franchise territories, it lacks a consolidated figure for the net carrying value of all franchise territories as of December 31, 2024. A prospective franchisee should inquire with Exit about the total net carrying value of franchise territories to gain a clearer understanding of the company's asset valuation and financial health.