What was the amount of interest capitalized by Christian Brothers Automotive in 2023 related to leased properties?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
lders' equity | $ 663,061,823 | $ 576,351,339 |
Consolidated Statements of Income Years Ended December 31, 2023 and 2022
| 2023 | 2022 | |
|---|---|---|
| Revenues | $ 137,196,643 | $ 122,309,502 |
| Operating Costs and Expenses | ||
| Cost of revenues | 42,731,504 | 40,601,283 |
| Selling, general and administrative expenses | 50,507,014 | 41,565,152 |
| Compensation expense associated with ESOP | 10,121,713 | 14,206,798 |
| Total operating costs and expenses | 103,360,231 | 96,373,233 |
| Income from operations | 33,836,412 | 25,936,269 |
| Other Income (Expense) | ||
| Gains on sale-leaseback transactions | 2,044,287 | 920,683 |
| Gains on sale of leased properties | 3,613,496 | 13,994,953 |
| Interest income | 1,234,707 | 859,510 |
| Interest expense | (6,596,136) | (2,497,171) |
| Other income, net | (293,984) | 467,395 |
| Total other income, net | 2,370 | 13,745,370 |
| Net income before state income taxes | 33,838,782 | 39,681,639 |
| State Income Tax Expense | (1,799,431) | (1,535,256) |
| Net income | 32,039,351 | 38,146,383 |
| Less net income attributable to noncontrolling interest | (592,784) | (11, |
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, the company's interest expense for 2023 was ($6,596,136). This figure reflects the total interest expenses, which include those related to leased properties. For a prospective franchisee, understanding the franchisor's interest expenses can provide insight into the financial health and leverage of Christian Brothers Automotive. It is important to note that this number represents the total interest expense and is not specific to leased properties.
To gain a clearer picture, a potential franchisee should inquire about the breakdown of this interest expense. Specifically, they should ask Christian Brothers Automotive about the portion of the $6,596,136 that is directly attributable to the financing of real estate and facilities that are leased to franchisees. This information would help in assessing the financial strategy and obligations related to property management within the franchise system.
Furthermore, understanding the interest expenses in relation to gains on sale-leaseback transactions and gains on the sale of leased properties, which were $2,044,287 and $3,613,496 respectively in 2023, can provide a more comprehensive view. These transactions indicate Christian Brothers Automotive's strategy of managing real estate assets and generating revenue through property-related activities. A franchisee should investigate how these activities impact the overall financial stability and support provided to franchise locations.