Over what period are capitalized software costs generally amortized by Remax?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company also purchases and develops software for internal use. Software development costs and upgrade and enhancement costs incurred during the application development stage that result in additional functionality are capitalized. Costs incurred during the preliminary project and post-implementation operation stages are expensed as incurred. Capitalized software costs are generally amortized over a term of two to five years. Purchased software licenses are amortized over their estimated useful lives.
Source: Item 1 — Business and Organization (FDD pages 334–464)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, capitalized software costs are generally amortized over a period of two to five years. This means that Remax spreads the cost of its software investments over this timeframe for accounting purposes.
For a prospective franchisee, this detail is relevant because it provides insight into Remax's financial practices and how they manage their assets. Software is a critical component of many franchise operations, and understanding how these costs are handled can be useful in evaluating the overall financial health and stability of the company.
It's important to note that this amortization period applies to capitalized software costs, which are specific to software development costs and upgrade costs incurred during the application development stage that result in additional functionality. Costs incurred during the preliminary project and post-implementation operation stages are expensed as incurred, meaning they are recognized immediately rather than amortized over time.