What was the reported total operating lease cost for Carls in fiscal year 2024?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
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 $ 77,732 $ 7,595 2026 245 69,733 8,191 2027 213 60,351 8,202 2028 190 52,474 7,853 2029 97 41,874 7,129 Thereafter 202 119,002 45,439 Total future minimum lease and sublease rent revenue 1,193 $ 421,166 $ 84,409 Unearned interest income (229) Present value of leases receivable 964 Less current portion (180) Leases receivable, less current portion $ 784
Company as Lessee
The components of lease cost for January 31, 2024 and 2023 are as follows:
| Fiscal 2024 | Fiscal 2023 | |
|---|---|---|
| Finance lease cost: | ||
| Amortization of finance lease assets | $ 1,596 | $ 2,432 |
| Interest on finance lease liabilities | 1,572 | 1,302 |
| Variable lease cost | 2 | 155 |
| Total finance lease cost | 3,170 | 3,889 |
| Operating lease cost | 85,267 | 84,890 |
| Variable lease cost | 1,229 | 1,135 |
| Total operating lease cost | 86,496 | 86,025 |
| Total lease cost | $ 89,666 | $ 89,914 |
Minimum lease payments for all leases and the present value of minimum lease payments for operati
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, there are two different values reported for the total operating lease cost in fiscal year 2024. One excerpt from the FDD indicates that the total operating lease cost was $86,496. Another excerpt from the same document states that the total operating lease cost was $94,194 for the same period. These discrepancies may be due to differing accounting methods or the inclusion/exclusion of certain subsidiaries or business segments in the consolidated financial statements.
It is important to note that these figures represent the operating lease costs incurred by Carls as a company, and not necessarily the lease costs that a franchisee would incur. A franchisee's lease costs would depend on factors such as the location of the restaurant, the size of the premises, and the terms of the lease agreement.
A prospective franchisee should seek clarification from Carls regarding these discrepancies and obtain detailed information about the typical lease costs for a franchise location. Understanding these costs is crucial for assessing the financial viability of a Carls franchise.