According to All Team's 2025 Franchise Disclosure Document, the value of the operating lease right-of-use (ROU) asset in 2022 was $192,816. This figure represents the company's right to use an underlying asset for the lease term. The ROU assets and lease liabilities are recognized at the date the lease began, based on the present value of lease payments over the lease term.

For a prospective All Team franchisee, understanding the concept of ROU assets is crucial because it reflects the financial obligations tied to leased properties or equipment. The initial recognition and ongoing accounting for leases can impact the franchisee's balance sheet and financial ratios. Lease liabilities represent the obligation to make lease payments arising from the lease.

The document also mentions that All Team adopted ASU 2016-02 on January 1, 2022, which relates to leases. This accounting standard significantly changes how leases are reported on financial statements, requiring companies to recognize assets and liabilities for most leases. All Team uses its incremental borrowing rate to determine the present value of lease payments, as their leases do not typically provide an implicit rate.

It is important to note that leases with an initial term of 12 months or less are not recorded on the balance sheet; instead, lease payments are recognized as lease expense on a straight-line basis over the lease term. This short-term lease recognition exemption can simplify the accounting for certain leases. Franchisees should consult with financial professionals to fully understand the implications of these lease accounting standards on their business.