What discount rate does Bw Premier Collection use for its leases?

According to Bw Premier Collection's 2025 Franchise Disclosure Document, the company uses a risk-free rate as the discount rate for all asset classes. For operating leases as of November 30, 2024, the weighted average discount rate was 3.58% with a weighted average remaining lease term of 2.9 years. As of November 30, 2023, the weighted average discount rate was 3.42% with a weighted average remaining lease term of 2.3 years.

This means that Bw Premier Collection calculates the present value of its lease obligations using a rate based on the return of a risk-free investment. The discount rate is a significant factor in determining the value of lease liabilities on the company's balance sheet. A higher discount rate would result in a lower present value of lease liabilities, while a lower discount rate would result in a higher present value.

The difference between the 2023 and 2024 weighted average discount rates (3.42% vs. 3.58%) suggests a slight increase in the risk-free rate used by Bw Premier Collection year-over-year. This could be due to changes in prevailing interest rates or the company's assessment of risk. The weighted average remaining lease term also increased slightly from 2.3 years to 2.9 years, which could reflect changes in the company's leasing strategy or the terms of its lease agreements.

Prospective franchisees should understand that these discount rates and lease terms apply to Bw Premier Collection's corporate leases and may not directly reflect the terms available to individual franchisees. However, this information provides insight into the company's financial practices and its approach to lease accounting. Franchisees entering into their own lease agreements should consult with financial advisors to determine appropriate discount rates and lease terms for their specific circumstances.