What was the value of the operating right-of-use asset for Christian Brothers Automotive as of December 31, 2024?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
t fair value): | | |---|---| | Fair value of cash consideration transferred | $2,204,000 | The amount of expense incurred during the years ended December 31, 2024 and 2023, pertaining to operating leases is approximately $50,553,000 and $45,584,000, respectively.
As of December 31, 2024 and 2023, the weighted-average remaining lease term was 11.16 years and 11.07 years, respectively. The right-of-use assets and lease liabilities were calculated using a weight
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to the 2025 Christian Brothers Automotive FDD, the company incurred approximately $50,553,000 in expenses related to operating leases for the year ending December 31, 2024. As of December 31, 2024, the weighted-average remaining lease term was 11.16 years, and the right-of-use assets and lease liabilities were calculated using a weighted-average discount rate of 2.99%.
For a prospective franchisee, this indicates that Christian Brothers Automotive relies significantly on operating leases for its business locations. The substantial lease expenses reflect the cost of securing these locations. The weighted-average remaining lease term of over 11 years suggests that Christian Brothers Automotive typically enters into long-term lease agreements, providing stability but also representing a long-term financial commitment.
The discount rate used to calculate the right-of-use assets and lease liabilities affects the present value of these obligations. A higher discount rate would result in a lower present value of lease liabilities, while a lower rate would increase the present value. The 2.99% discount rate used as of December 31, 2024, provides a benchmark for understanding how Christian Brothers Automotive values its lease obligations.
It is important for potential franchisees to understand the implications of these lease arrangements, as they can significantly impact the financial performance of their individual franchise locations. Prospective franchisees should inquire about typical lease terms, locations, and any support Christian Brothers Automotive provides in negotiating favorable lease agreements.