What was the original cost of agreements with franchisees for Sonesta Select Sonesta Essential?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
tion impact of sold assets was $0.4 million.
5. Intangible Assets, net
At December 31, 2024 and 2023, our intangible assets were as follows (in thousands):
| Asset Description | Cost | umulated | Net | |
|---|---|---|---|---|
| ortization | ||||
| Amortizable intangible assets: | ||||
| Agreements with franchisees | $ 5,184 | $ | (902) | $ 4,282 |
| Carrying value of brand names (finite lives) | 200 | (128) | 72 | |
| Total amortizable intangible assets | 5,384 | (1,030) | 4,354 | |
| Carrying value of brand names (indefinite lives) | 16,530 | 16,530 | ||
| Intangible assets, net | $ 21,914 | $ | (1,030) | $ 20,884 |
| Asset Description | Cost | ımulated | Net | |
| -------------------------------------------------- | ----------- | ------- | ----------------------- | -------------- |
| rtization | ||||
| Amortizable intangible assets: | ||||
| Agreements with franchisees | $ 5,184 | $ | (666) | $ 4,518 |
| Carrying value of brand names (finite lives) | 200 | (94) | 106 | |
| Total amortizable intangible assets |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 84)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, the original cost of agreements with franchisees is detailed within the financial statements regarding amortizable intangible assets. The cost for these agreements was initially valued at $5,184. This figure represents the total investment Sonesta Select Sonesta Essential has made in securing franchise agreements, which are considered assets with a finite lifespan. These costs are then amortized over the life of the agreements.
Amortization is the process of gradually writing off the initial cost of an asset over its useful life. In the case of Sonesta Select Sonesta Essential's franchise agreements, the accumulated amortization was reported as $(902) and $(666) in different periods, reducing the net value of these assets. The net value, after accounting for accumulated amortization, was $4,282 and $4,518 respectively. This accounting practice reflects the diminishing value of the franchise agreements as they approach the end of their terms.
For a prospective Sonesta Select Sonesta Essential franchisee, understanding these figures is crucial. It provides insight into how the franchisor values its franchise agreements and manages its assets. The amortization period, which averaged 18, 19, and 16 years in 2024, 2023, and 2022 respectively, indicates the expected duration over which these agreements generate value for the franchisor. This information can help franchisees assess the long-term financial health and stability of Sonesta Select Sonesta Essential.