What is the estimated useful life for Pump It Up trademarks and trade names?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
TE 4 GOODWILL AND INTANGIBLE ASSETS**
Goodwill as of, and changes in the carrying amount of goodwill during the years ended, December 31, 2023 and 2022, are as follows:
| State | Effective Date | |
|---|---|---|
| California | IN PROGRESS | |
| Illinois | IN PROGRESS | |
| Maryland | IN PROGRESS | |
| Michigan | IN PROGRESS | |
| Minnesota | IN PROGRESS | |
| New York | IN PROGRESS | |
| Virginia | IN PROGRESS | |
| Washington | IN PROGRESS | |
| Wisconsin | IN PROGRESS |
NOTE 4 GOODWILL AND INTANGIBLE ASSETS (CONTINUED)
Intangible assets and estimated remaining useful lives of intangible assets at December 31, 2023 and 2022, are as follows:
| Trademarks and Trade Names Franchise Contracts Total | Amount $ 5,628,000 2,882,039 $ 8,510,039 | Estimated Useful Life Indefinite 11 to 14 Years |
|---|
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, the trademarks and trade names have an indefinite estimated useful life. The franchise contracts, on the other hand, have an estimated useful life of 11 to 14 years. This information is relevant to the amortization of these assets. The gross carrying amount for trademarks and trade names is listed as $5,628,000. The gross carrying amount for franchise contracts is $2,882,039, bringing the total to $8,510,039.
In 2022, the accumulated amortization for franchise contracts was $(1,769,125), resulting in a net carrying amount of $1,112,914. In 2023, the accumulated amortization for franchise contracts was $(1,982,741), resulting in a net carrying amount of $899,298. The trademarks and trade names did not have any accumulated amortization in either 2022 or 2023, and the net carrying amount remained at $5,628,000 for both years.
For a prospective Pump It Up franchisee, this indicates that the company values its trademarks and trade names as assets with enduring value, not subject to depreciation. However, the franchise contracts themselves are amortized over a period of 11 to 14 years, reflecting their limited contractual life. This distinction is important for understanding the company's financial statements and how it manages its intangible assets.