What is the present value of lease liabilities for Aunt Millies Bakeries third parties?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
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The following table represents the weighted-average remaining lease term and discount rate as of September 30, 2024 and 2023:
| 2024 | 2023 | |
|---|---|---|
| Weighted average remaining lease term (years) Weighted average discount rate | 6.86 | 9.72 |
| 3.74% | 4.26% |
Future undiscounted lease payments for the Corporation's lease liabilities are as follows as of September 30, 2024:
| R | elated Parties | 9 | Third Parties | Total | ||
|---|---|---|---|---|---|---|
| 2025 | $ | 1,731,497 | $ | 3,546,573 | $ | 5,278,070 |
| 2026 | 1,513,587 | 2,899,996 | 4,413,583 | |||
| 2027 | 1,158,988 | 2,120,538 | 3,279,526 | |||
| 2028 | 1,032,306 | 1,548,750 | 2,581,056 | |||
| 2029 | 974,241 |
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries's 2025 Franchise Disclosure Document, the present value of lease liabilities to third parties is $10,430,263. This figure represents the discounted value of future lease payments owed by Aunt Millies Bakeries to entities that are not related parties. This calculation takes into account the time value of money, essentially stating what those future lease payments are worth today.
Understanding the present value of lease liabilities is crucial for prospective franchisees as it provides insight into the financial obligations Aunt Millies Bakeries has undertaken. Lease liabilities typically arise from agreements to lease property or equipment, which are essential for business operations. The present value gives a clearer picture of the actual debt burden compared to simply looking at the total undiscounted future payments.
Furthermore, the FDD provides a breakdown of these lease liabilities over several years, from 2025 to 2029, and thereafter. This detailed schedule allows potential investors to assess the timing and magnitude of these financial commitments. The total future lease payments to third parties amount to $11,209,672, but after deducting imputed interest of $779,409, the present value is $10,430,263. The document also specifies the current portion of these lease liabilities, which is $3,274,251, and the non-current portion, which is $7,156,012. This breakdown helps in understanding the short-term versus long-term nature of these obligations.
For a prospective franchisee, this information is valuable for assessing the overall financial health and stability of Aunt Millies Bakeries. It is important to consider these lease obligations in conjunction with other financial data provided in the FDD to make an informed investment decision. Understanding the present and future financial commitments of the franchisor can aid in evaluating the potential risks and rewards of investing in an Aunt Millies Bakeries franchise.