What was the reported total operating lease cost for Carls in fiscal year 2023?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
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We sublease to others some of our property under finance leases. These assets are recorded as lease receivables and are included in accounts receivable, net and other assets, net in our accompanying Consolidated Balance Sheets. As of January 31, 2024, future minimum lease and sublease rent revenue expected to be received, are as follows:
Finance Leases Operating Leases Subleases Subleases Owned Properties Fiscal: 2025 $ 246 $ 79,579 $ 7,595 2026 245 71,374 8,191 2027 213 61,550 8,202 2028
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the total operating lease cost for fiscal year 2023 was $94,640. This figure includes both the operating lease cost of $93,249 and the variable lease cost of $1,391.
For a prospective Carls franchisee, understanding the operating lease costs is crucial. These costs represent a significant portion of the overall expenses and can greatly impact profitability. Operating leases typically cover the use of property and equipment necessary for running the franchise.
The variable lease costs, which are included in the total operating lease cost, may fluctuate based on factors such as sales performance or other operational metrics. Franchisees should carefully review the terms of their lease agreements to understand how these variable costs are determined and how they might affect their financial planning.
It's important for potential franchisees to analyze these figures in conjunction with other financial data provided in the FDD to get a comprehensive view of the financial obligations and potential returns associated with operating a Carls franchise. Consulting with a financial advisor is recommended to fully assess the implications of these lease costs.