How does Remax amortize leasehold improvements, and what determines the amortization period?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment, including leasehold improvements, are initially recorded at cost. Depreciation is provided for on a straight-line method over the estimated useful lives of each asset class and commences when the property is placed in service. Amortization of leasehold improvements is provided for on a straight-line method over the estimated benefit period of the related assets or the lease term, if shorter.
Source: Item 1 — Business and Organization (FDD pages 334–464)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, leasehold improvements are amortized using the straight-line method. This means the cost of the improvements is evenly spread out over a specific period, rather than expensed all at once or using an accelerated method.
The amortization period for these improvements is determined by either the estimated benefit period of the related assets or the lease term, whichever is shorter. The 'estimated benefit period' refers to how long Remax expects to gain value from the improvements. The 'lease term' is the length of the lease agreement for the property where the improvements are made.
For a Remax franchisee, this means that if you make improvements to your office space, you'll depreciate those costs over the shorter of the useful life of the improvement or the length of your lease. If you sign a short lease, you will depreciate those improvements faster. This accounting practice affects the franchisee's financial statements and tax obligations, as amortization is a deductible expense.