What was the amount of depreciation and amortization for My Salon Suite in 2024?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
Share-based compensation | - | - | 1,240,361 | - | - | 1,240,361 | | Net income | - | - | - | 9,668,250 | - | 9,668,250 | | Foreign currency translation adjustments | - | - | - | - | (100,769) | (100,769) | | Balance at December 31, 2024 | 1,000 | $ 1,000 | $ 363,125,409 | $ 79,627,020 $ | | (100,769) $ 442,652,660 |
Consolidated Statements of Cash Flows
| ` | 2024 | 2023 |
|---|---|---|
| Operating activities | ||
| Net income | $ 9,668,250 | $ 12,569,087 |
| Adjustments to reconcile net income to net cash | ||
| provided by operating activities: | ||
| Bad debt recovery, net | (85,758) | 429,277 |
| Depreciation & amortization | 10,981,870 | 4,502,4 |
Source: Item 17 — (r) of the FDD and Section 13 of the Franchise Agreement disclose the existence of certain covenants restricting competition to which Franchisee must agree. The Commissioner has held that covenants restricting competition contrary to Section 9-08-06 of the North Dakota Century Code, without further disclosing that such covenants may be subject to this statue, are unfair, unjust, or inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law. The FDD and the Franchise Agreement are amended accordingly to the extent required by law. (FDD pages 230–274)
What This Means (2025 FDD)
According to My Salon Suite's 2025 Franchise Disclosure Document, the total depreciation and amortization expenses for the year 2024 were $10,981,870. This figure represents the accounting recognition of the reduction in value of My Salon Suite's assets over time, encompassing both tangible assets (depreciation) and intangible assets (amortization). This number is significantly higher than the $4,502,473 reported for 2023.
For a prospective franchisee, understanding depreciation and amortization is crucial because it reflects the capital investment My Salon Suite makes in its infrastructure and assets. Higher depreciation and amortization expenses can indicate substantial investments in assets like equipment, leasehold improvements, and software, which are essential for running the business. However, it's important to note that while these are non-cash expenses, they do impact the company's net income and can affect its overall financial performance.
It's also worth noting that the FDD mentions that furniture, equipment, and developed software are depreciated over three to seven years, while leasehold improvements are amortized over the shorter of the lease term or the asset's useful life. This suggests that My Salon Suite carefully manages its assets and accounts for their declining value in a structured manner. Franchisees may want to inquire about the specific types of assets contributing to these expenses and how they are managed to ensure long-term operational efficiency.