What is the useful life for leasehold improvements for a Golden Krust Caribbean Restaurant?

According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, the useful life for leasehold improvements is the lesser of the lease life or 10 years. Leasehold improvements are alterations or upgrades made to a leased property.

For a Golden Krust Caribbean Restaurant franchisee, this means that the period over which they can depreciate these improvements for accounting purposes will be capped at 10 years, or the length of the lease if it is shorter. For example, if a franchisee signs a 5-year lease and invests in significant leasehold improvements, they will only be able to depreciate those improvements over 5 years, not 10.

The 2024 FDD also lists the value of leasehold improvements for 2023 at $164,044 and for 2022 at $368,822. These figures likely represent the net value of leasehold improvements (original cost less accumulated depreciation) on the company's balance sheet for corporate-owned locations, not the initial investment amounts. Prospective franchisees should consult with a financial advisor to understand the implications of leasehold improvements and depreciation on their business's financial statements.