What is the expected operating lease expense for Surestay Hotel By Best Western in 2028?
Surestay_Hotel_By_Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
| (in thousands) | 2023 | 2022 | | |---|---|---|---| | | Current contract liabilities | $ 122,503 | $ 100,161 | | | Non-current contract liabilities | 221,278 | 246,706 | | | Total contract liabilities | $ 343,781 | $ 346,867 | | (in thousands) | 2023 | 2022 | | | | Liability related to the loyalty program | $ 292,438 | $ 292,993 | | | Affiliation fees received from hoteliers | 51,343 | 53,874 | | | Total contract liabilities | $ 343,781 | $ 346,867 | The Company has elected the private-company alternative to amortize goodwill over 10 years. Amortization expense for goodwill was approximately $0.8 million and $0.8 million for the years ended November 30, 2024 and 2023, respectively, and is estimated to be approximately $0.8 million annually for fiscal years ended 2025 through 2028.
Acquired customers and developed technology are definite-life intangible assets, and as such, amortization expense is calculated using a method that most appropriately reflects expected cash flows from these assets with an amortization period, ranging from 7.5 years to 10 years, depending on the type of asset. Amortization expense for definite-life intangible assets was approximately $0.4 million and $0.4 million for the years ended November 30, 2024 and 2023, respectively, and is estimated t
Source: Item 23 — Receipts (FDD pages 88–286)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for Surestay Hotel By Best Western does not include an estimated operating lease expense for 2028. However, it does provide information on amortization expenses.
The document states that the company has elected the private-company alternative to amortize goodwill over 10 years. The amortization expense for goodwill was approximately $0.8 million for the years ended November 30, 2024 and 2023, and is estimated to be approximately $0.8 million annually for fiscal years ended 2025 through 2028. Additionally, amortization expense for definite-life intangible assets was approximately $0.4 million for the years ended November 30, 2024 and 2023, and is estimated to be approximately $0.4 million annually for fiscal years ended 2025 and 2026.
Since the FDD does not provide the specific operating lease expense for Surestay Hotel By Best Western, it would be prudent for a prospective franchisee to directly ask the franchisor about these costs. Understanding the typical lease terms, average rental rates, and any factors that could influence these expenses will be crucial in assessing the financial viability of the franchise.