What is Bor Restoration's definition of a short-term lease?

According to Bor Restoration's 2024 Franchise Disclosure Document, a short-term lease is defined as a lease with a term of 12 months or less. Bor Restoration does not report right-of-use (ROU) assets and lease liabilities for its short-term leases. Instead, the lease payments for these short-term leases are reported as lease expenses on a straight-line basis over the lease term.

This means that if a Bor Restoration franchisee enters into a lease agreement for their business location or equipment that is 12 months or less, the company will account for the lease payments as a regular expense rather than capitalizing it as an asset with associated liabilities on their balance sheet. This can simplify the accounting process for short-term leases, as it avoids the complexities of calculating and reporting ROU assets and lease liabilities.

For a prospective Bor Restoration franchisee, understanding this definition is important for financial planning and accounting purposes. If a franchisee anticipates needing a space or equipment for a short period, opting for a lease term of 12 months or less could simplify their financial reporting. However, it's essential to consider the overall cost and terms of the lease, as short-term leases may have different pricing structures compared to longer-term agreements. Franchisees should consult with a financial advisor to determine the best leasing strategy for their specific circumstances.