How are lease liabilities recognized by Body Brain Center?

According to Body Brain Center's 2025 Franchise Disclosure Document, the company leases its operating facility under a non-cancellable operating lease. Additionally, Body Brain Center has the right to use a portion of the premises of Body & Brain Yoga and Health Centers, Inc. (BBYHC) under a premises use agreement.

Regarding related party transactions, Body Brain Center has a premises use agreement with Body & Brain Yoga and Health Centers, Inc., which is the sole member of the company. The agreement is on a month-to-month basis and continues until terminated as provided in the agreement. For the years ended December 31, 2023, and 2022, the rent expense under this agreement amounted to $9,600 for each year.

For a prospective franchisee, this indicates that Body Brain Center itself enters into lease agreements for its operating facilities and also has a premises use agreement with its sole member, Body & Brain Yoga and Health Centers, Inc. However, the FDD does not specify how Body Brain Center recognizes lease liabilities on its balance sheet, only the rent expense amounts paid to a related party. A prospective franchisee should seek clarification from Body Brain Center regarding the accounting treatment of lease liabilities, including the recognition and measurement methods used, to fully understand the financial implications of lease obligations.