What was the weighted-average discount rate for the operating lease for Bonchon in 2023?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
credit risk with respect to receivables is limited due to the number of franchisees in the Company's customer base and their geographic dispersion. The Company provides an allowance for credit losses equal to the estimated collection losses based on historical experience coupled with a review of the current market conditions
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 2024 and 2023:
| Local | |
|---|---|
| Intrastate, IntraLATA Long Distance Service (also known as local toll) | |
| Interstate, InterL |
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the weighted-average discount rate for the operating lease in 2023 was 0.59%. This rate is used to calculate the present value of future lease payments, reflecting the time value of money and the risk associated with the lease.
For a prospective Bonchon franchisee, understanding the discount rate is crucial because it affects how the lease liability is reported on the franchisee's balance sheet. A higher discount rate would result in a lower present value of lease liabilities, while a lower rate would increase the reported liability. This can impact financial ratios and potentially affect the franchisee's ability to secure financing.
It's important to note that this discount rate is a weighted average, meaning it takes into account the various lease terms and conditions applicable to Bonchon's operating leases. Franchisees should consult with financial advisors to fully understand the implications of lease accounting standards and how they affect their specific financial situation. The FDD provides this figure as part of its financial disclosures, offering transparency into Bonchon's financial practices related to leasing.