What was the total operating lease cost for Carls for 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 Less current portion (634) (881) (13,375) (60,398) Lease obligations, less current portion $ 15,719 $ 7,650 $ 91,971 $ 247,709 Net rent under non-cancelable operating leases was as follows:
| Fiscal 2024 | Fiscal 2023 | |
|---|---|---|
| Rent revenue: | ||
| Minimum rent revenue | $ 87,594 | $ 91,482 |
| Variable rent revenue | 6,334 | 6,622 |
| Total rent revenue | 93,928 | 98,104 |
| Rent expense: | ||
| Operating lease cost | (85,267) | (84,890) |
| Variable lease cost | (1,229) | (1,135) |
| Total operating lease cost | (86,496) | (86,025) |
| Net rent income | $ 7,432 | $ 12,079 |
Lease Term and Discount Rate as of January 31,
Weighted-average remaining lease term:
|
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 from the financial statements. However, another excerpt from the financial statements indicates a total operating lease cost of $86,025 for the same period. These figures represent the expenses Carls incurred for operating leases during that fiscal year.
It is important to note that the FDD contains two different values for the same metric in different excerpts. This discrepancy could be due to various factors, such as differing accounting treatments, the inclusion of different entities within the consolidated financial statements, or simply a typographical error.
A prospective franchisee should seek clarification from Carls regarding the discrepancy in the reported total operating lease costs for fiscal year 2023. Understanding the reasons behind these differing figures is crucial for accurately assessing the financial health and lease obligations of the company. It would be prudent to inquire about the specific components included in each calculation and any changes in accounting practices that may have occurred between the two reporting periods.