What is City Wide's policy regarding leases with an initial term of 12 months or less?

According to City Wide's 2025 Franchise Disclosure Document, the company has elected not to record leases with an initial term of 12 months or less on its consolidated balance sheets. Instead of capitalizing these leases as assets and liabilities, City Wide recognizes the lease expense on these short-term leases on a straight-line basis over the lease term.

For a prospective City Wide franchisee, this policy means that if they enter into a lease agreement for their business location with a term of 12 months or less, City Wide will not reflect the leased asset or the corresponding lease obligation on its balance sheet. This can simplify the franchisee's accounting and financial reporting for these short-term leases, as the expense is recognized evenly over the lease duration rather than through depreciation and interest expense.

This accounting treatment is a policy election available under accounting standards, offering a practical approach for leases of minimal duration. Franchisees should be aware of this policy as it affects how their short-term lease obligations are accounted for in City Wide's financial statements.