What is the estimated useful life range for Hardees' leasehold improvements?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
and 2024 consisted of the following:
| | 20 | 25 | 2024 | |--------------------------------|----|---------|--------------| | Trade receivables | $ | 26,269 | $ 21,364 | | Leases receivable | | 217 | 181 | | Notes receivable | | 1,492 | 2,096 | | Allowance for credit losses | | (4,188) | (1,893) | | Total accounts receivable, net | $ | 23,790 | $ 21,748 | The following table summarizes the activity in the allowance for credit losses:
| Fi | iscal 2025 | F | iscal 2024 | |
|---|---|---|---|---|
| Allowance for credit losses, beginning of year | $ | 1,893 | $ | 1,550 |
| Provision |
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, the estimated useful life for leasehold improvements ranges from 3 to 25 years. Leasehold improvements are amortized using the straight-line method, calculated over the shorter of either the estimated useful life of the assets or the term of the lease.
For a Hardees franchisee, this means that the cost of any improvements made to the leased property will be spread out as an expense over a period between 3 and 25 years, or the length of the lease, whichever is shorter. This amortization period also includes any renewal option periods, but only if exercising the renewal option is reasonably certain at the time of acquisition and failure to do so would result in an economic penalty.
This accounting practice affects the franchisee's financial statements, as the cost of leasehold improvements is not fully expensed immediately but rather depreciated over time. This can impact profitability calculations and tax liabilities during the term of the lease. Franchisees should carefully consider the lease terms and potential renewal options when planning and budgeting for leasehold improvements to optimize their financial strategy.