What was the total operating lease cost for Carls during fiscal year 2023?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Other Franchise & Company Operated Franchise & Other Fiscal: 2025 $ 1,573 $ 1,501 $ 15,730 $ 67,153 2026 1,629 1,426 14,906 59,669 2027 1,658 1,358 13,995 50,431 2028 1,672 1,302 12,851 42,140 2029 1,684 1,161 11,193 31,607 Thereafter 16,147 5,032 49,311 86,809 Total minimum lease payments 24,363 11,780 117,986 337,809 Less amount representing interest (8,010) (3,249) (12,640) (29,702) Present value of minimum lease payments 16,353 8,531 105,346 308,107
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, as shown in one excerpt. However, another excerpt shows the total operating lease cost for fiscal year 2023 as $86,025. A third excerpt shows the total operating lease cost for fiscal year 2023 as $98,547. These discrepancies may be due to differing accounting methods or changes in the number of properties leased by Carls.
Prospective franchisees should be aware of these inconsistencies and carefully review the financial statements with a financial advisor to understand the true costs associated with leasing properties. Understanding the different types of leases (finance vs. operating) and their implications for the franchisee's financial obligations is also crucial. The FDD also mentions variable lease costs, which can fluctuate based on factors like sales performance, adding another layer of complexity to budgeting and financial planning.
It is important for potential Carls franchisees to discuss these figures with the franchisor to clarify the reasons for the discrepancies and to gain a comprehensive understanding of all lease-related expenses. This due diligence will help in making informed decisions about the financial viability of the franchise.