What were Chem Dry's long-term obligations under operating leases as of December 31, 2022?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
| Years Ending December 31 | Amount |
|---|---|
| 2024 | $ 1,199 |
| 2025 | 1,213 |
| 2026 | 1,127 |
| Total | 3,539 |
| Less amount | 371 |
| representing | |
| interest | |
| Present value of | 3,168 |
| net minimum | |
| lease payments | |
| Less current | 1,002 |
| obligations | |
| Long-term | $ 2,166 |
| obligations under | |
| operating leases |
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the company's long-term obligations under operating leases as of December 31, 2022, were $2,166,000. This figure represents the present value of net minimum lease payments, less current obligations. The company's obligations under operating leases primarily relate to facilities. These leases expire at various dates through December 2026, considering renewal options and termination provisions.
The calculation of the right-of-use asset and related lease liability involved discount rates ranging from 3.25% to 8.50%. As of December 31, 2023, the weighted-average remaining lease term was 38 months, and the weighted-average discount rate used was 7.79%. In 2023, Chem Dry paid $1,172,000 in total cash for operating leases, excluding any variable payments.
Prospective franchisees should understand that these lease obligations reflect Chem Dry's financial commitments for its facilities. While this information pertains to the franchisor's obligations, it can provide insight into the financial health and stability of the company. Franchisees typically do not assume these specific lease obligations, but understanding the franchisor's financial commitments can be valuable during due diligence.