What was the amortization expense for Gold Star for the year ended December 31, 2022?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
| , | $ 502,317 $ | 343,579 $ | 282,000 |
|---|---|---|---|
| Addition of Goodwill | - | 200,000 | 89,300 |
| Amortization Expense | (52,931) | (41,262) | (27,721) |
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the amortization expense for the year ending December 31, 2022, was $41,576, as detailed in Item 23. This figure represents the expense recognized for the consumption of intangible assets over that specific accounting period. Amortization is a standard accounting practice that reflects the reduction in value of intangible assets, such as patents or trademarks, over their useful life.
For a prospective Gold Star franchisee, understanding the amortization expense is crucial for assessing the company's financial health and profitability. Amortization, along with depreciation, is a non-cash expense, meaning it reduces net income without involving an actual outflow of cash. This distinction is important because it provides a more accurate picture of the company's cash flow from operations, which is a key indicator of its ability to meet its financial obligations and invest in future growth.
The FDD also lists amortization expenses for the years ending December 31, 2024 ($10,392) and December 31, 2023 ($10,967). Reviewing these figures alongside other financial statement items, such as revenue and net income, can help potential franchisees evaluate the overall financial performance and stability of Gold Star. It is important to note that these figures are specific to the franchisor's operations and may not directly translate to the performance of an individual franchise unit. However, they provide valuable insight into the financial management and accounting practices of the company.
Prospective franchisees should consult with a financial advisor to fully understand the implications of amortization and other financial statement items. This will help them make an informed decision about investing in a Gold Star franchise.