What is the reported amount for the long-term portion of the sale-leaseback liability for Carls?

According to Carls's 2024 Franchise Disclosure Document, the financing method sale-leaseback liability, long-term portion, is reported as $208,337 for 2024 and $219,707 for 2023. This indicates the amount of long-term liability Carls has related to sale-leaseback transactions using the financing method.

Sale-leaseback transactions are a method where Carls sells properties to independent third parties and then leases them back. The initial minimum lease terms for these transactions are 20 years and include renewal options. Carls retains the option to repurchase these properties, which, for accounting purposes, means the transactions are treated as financing rather than sales.

Under the financing method, the proceeds from these sales are recorded as liabilities, specifically in other current liabilities and other long-term liabilities, until Carls's involvement with the properties is terminated. The properties themselves are reported as owned assets and are depreciated over their useful lives. Rent payments are recorded as principal and interest.

For a prospective franchisee, this information provides insight into Carls's financial strategies and long-term obligations related to property management. It is important to note that these liabilities reflect Carls's approach to managing its real estate assets and financing, which could indirectly affect the financial stability and operational decisions of the franchise system.