What were the additions to operating lease right-of-use assets obtained from operating lease liabilities for Chesters in 2022?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
mingham, Alabama April 4, 2024
CHESTER'S INTERNATIONAL, LLC BALANCE SHEETS DECEMBER 31, 2023 AND 2022
| ASSETS | ||
|---|---|---|
| 2023 | 2022 | |
| CURRENT ASSETS | ||
| Cash | $ 2,515,674 | $ 2,392,340 |
| Accounts receivable, net of allowance for | ||
| doubtful accounts | 5,299,346 | 3,735,366 |
| Due from related parties | 1,117,539 | 684,044 |
| Inventories, net | 1,247,308 | 1,130,712 |
| Prepaid expenses | 49,815 | 101,200 |
| Total current assets | 10,229,682 | 8,043,662 |
| PROPERTY AND EQUIPMENT, NET | 878,650 | 148,788 |
| OPERATING LEASE RIGHT-OF-USE ASSETS, NET | 1,820,812 | 1,304,672 |
| GOODWILL, NET | 1,613,657 | 1,936,388 |
| INTANGIBLE ASSETS, NET | 30,523 | 52,666 |
| TOTAL ASSETS | $ 14,573,324 | $ 11,486,176 |
| LIABILITIES AND MEMBERS' EQUITY | ||
| CURRENT LIABILITIES | ||
| Current maturities of long-term debt | $ 1,628,607 | $ 1,809,133 |
| Accounts payable | 2,904,502 | 719,790 |
| Accrued liabilities | 1,285,555 | 1,365,243 |
| Customer deposits | 609,822 | 533,879 |
| Current portion of operating lease liability | 181,240 | 398,805 |
| Unearned franchise fees | 136,500 | 224,900 |
| Total current liabilities | 6,746,226 | 5,051,750 |
| LONG-TERM LIABILITIES | ||
| Operating lease liabilities, less current portion | 1,842,053 | 905,867 |
| Long-term debt | 1,123,700 | 1,429,725 |
| Total long-term |
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the net operating lease right-of-use assets were $1,304,672 in 2022. This figure represents the value of Chesters's rights to use leased properties, such as restaurant locations or office spaces, for its business operations. These assets are initially recognized on the balance sheet when Chesters enters into a lease agreement.
The operating lease right-of-use asset is directly related to the operating lease liabilities, which represent Chesters's obligation to make lease payments over the lease term. The right-of-use asset is initially measured at the same amount as the lease liability, plus any initial direct costs incurred by Chesters. The lease liabilities for Chesters in 2022 consisted of a current portion of $398,805 and a long-term portion of $905,867.
The difference between the operating lease right-of-use assets and liabilities can be influenced by factors such as the timing of lease payments, initial direct costs, and any lease incentives received. These figures are important for prospective franchisees to understand Chesters's financial obligations and asset values related to its leased properties. Reviewing these figures over multiple years can also provide insights into Chesters's leasing strategy and its impact on the company's overall financial health.