Where can I find more information about Bath Tune Up's commitments and contingencies related to leases?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
cember 31:
| Accrued compensation | $ 184,144 |
|---|---|
| Accrued accounts payable | 46,267 |
| Accrued cost of product sales | 216,671 |
| Accrued training costs | 33,694 |
| Accrued liabilities | $ 480,776 |
7. Commitments and Contingencies
Operating Leases
The Parent leases the Company's headquarters and training center and allocates a portion of its rent expense to the Company. The total rent expense incurred by the Parent was $2,008,423 for the year ended December 31, 2022, of which $207,650 was allocated to the Company and is included in operating and administrative expenses on the accompanying statement of earnings. In addition, the Company entered into two lease agreements in May 2022 for an office and storage building located in Aberdeen, South Dakota. The Company leases real estate under noncancellable operating lease agreements that expire at various dates through 2027. See Note 2 for a summary of the Company's policies relating to leases. The initial terms of operating leases are five years and certain leases provide for free rent periods, periodic rent increases, and renewal options. Monthly payments for these leases range from $700 to $4,774. All lease agreements generally require the Company to pay maintenance, repairs, prope
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 51–52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, details regarding the company's commitments and contingencies, specifically those related to operating leases, can be found in Item 21, which contains the financial statements. Commitments and contingencies are discussed in Note 6 to the financial statements.
The FDD states that Bath Tune Up leases real estate under noncancellable operating lease agreements that expire at various dates through 2027. The initial terms of these operating leases are five years, and some leases include free rent periods, periodic rent increases, and renewal options. Monthly payments for these leases range from $700 to $4,774. Generally, Bath Tune Up is required to cover maintenance, repairs, property taxes, and insurance costs, which are variable amounts based on actual costs incurred during each period.
For the year 2022, the total rent expense to the company was $352,978. The financial statements also indicate that Bath Tune Up has lease liabilities for the next five years and thereafter. Further details about the company's policies relating to leases are summarized in Note 2 of the financial statements. In 2022, Bath Tune Up adopted Accounting Standards Codification Topic 842 - Leases, which changed how leases are accounted for.