What was the net value of City Wide's Right-of-Use Asset - Operating Leases in 2023?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
have not been subjected to the auditing procedures applied in the audit of the consolidated financial statements and accordingly, we do not express an opinion or provide any assurance on it.
Kansas City, Missouri March 20, 2025
City Wide Franchise Company, Inc. & Subsidiaries Consolidated Balance Sheets December 31, 2024, 2023, and 2022
| 2024 | 2023 | 2022 | ||
|---|---|---|---|---|
| ASSETS | ||||
| Current Assets | ||||
| Cash and cash equivalents | $ 24,273,328 | $ | 17,836,030 | $ 20,166,393 |
| Accounts receivable, net of allowance | ||||
| 2024 - $132,811, 2023 - $0, 2022 - $0 | 5,389,631 | 4,711,498 | 4,120,583 | |
| Notes receivable, current maturities | 97,482 | 143,061 | 337,830 | |
| Deferred franchise costs, current portion | 159,494 | 150,281 | 146,607 | |
| Prepaid expenses | 968,181 | 644,999 | 628,582 | |
| Inventory | 16,768 | 75,493 | 75,418 | |
| Total current assets | 30,904,884 | 23,561,362 | 25,475,413 | |
| Property and Equipment, net | 1,390,853 | 2,018,516 | 3,081,584 | |
| Right-of-Use Asset - Operating Leases, net | 604,257 | 698,572 | 789,931 | |
| Other Assets | ||||
| Notes receivable, less current maturities | 4,133,296 | 4,133,296 | 4,158,686 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the net value of the Right-of-Use Asset - Operating Leases for 2023 was $698,572. This asset represents City Wide's right to use leased properties, primarily office space, for the duration of the lease term, after accounting for depreciation and amortization.
For a prospective City Wide franchisee, understanding the Right-of-Use Asset is crucial because it reflects the company's lease obligations and how they are accounted for on the balance sheet. These assets and liabilities are recognized when City Wide enters into lease agreements for properties like their headquarters. The value is calculated by discounting future lease payments to their present value, which can impact the company's overall financial health and stability.
The FDD also provides additional context regarding City Wide's leasing practices. The company's accounting policies combine lease and nonlease components when calculating the ROU assets and lease liabilities. City Wide uses a risk-free rate based on U.S. Treasury instruments to measure these liabilities. The company's headquarters are leased under an operating lease with a related party, set to expire in 2030, with a renewal option for five more years. Lease payments increase according to the individual lease contract rates, and termination is generally prohibited unless there is a violation of the lease agreement.
Reviewing the notes on leases in conjunction with the balance sheet provides a more complete picture of City Wide's financial commitments and how they manage their lease obligations. Franchisees should consider these factors as part of their due diligence to assess the financial stability and operational practices of the franchisor.