For Brightstar Care, what happens with leases that have a term of 12 months or less at the commencement date?

According to Brightstar Care's 2025 Franchise Disclosure Document, leases with a term of 12 months or less at the commencement date are treated differently than longer-term leases. Specifically, Brightstar Care expenses these short-term leases on a straight-line basis over the lease term. This means the expense is recognized evenly throughout the duration of the lease.

Unlike leases with terms longer than 12 months, Brightstar Care does not recognize a Right-of-Use (ROU) asset or lease liability for these short-term leases. An ROU asset represents the right to use an underlying asset for the lease term, while a lease liability represents the obligation to make lease payments arising from the lease. By not recognizing these for short-term leases, Brightstar Care simplifies the accounting process for these agreements.

This policy reflects the 'short-term lease exception' and impacts how Brightstar Care's financial statements reflect lease obligations. For a prospective franchisee, this means that any office space or equipment leases they enter into for a term of one year or less will have a simpler accounting treatment, with the expense being recognized evenly over the lease term without the need to account for an ROU asset or lease liability.