For The Standardx franchise, how is the depreciation timeframe for leasehold improvements determined?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
| Buildings and improvements | 10–50 years |
|---|---|
| Leasehold improvements | The shorter of the lease term or useful life of asset |
| Furniture and equipment | 3–20 years |
| Computers | 3–7 years |
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the depreciation timeframe for leasehold improvements is determined by whichever is shorter: the lease term or the useful life of the asset.
For a prospective franchisee, this means that the period over which they can deduct the cost of improvements made to their leased property is limited. If the lease term is shorter than the expected lifespan of the improvements, the depreciation must be spread out over the lease term. Conversely, if the improvements have a shorter useful life than the lease, the depreciation is limited to that shorter period.
This policy impacts the franchisee's tax planning and financial forecasting. Franchisees should carefully consider the length of their lease and the expected life of any planned leasehold improvements to understand the potential depreciation timeframe. This can influence decisions about the extent and nature of leasehold improvements, as a shorter depreciation period is generally more favorable for tax purposes.