What is the discount rate applied to the Craters & Freighters operating lease as of December 31, 2023?

According to Craters & Freighters's 2025 Franchise Disclosure Document, the discount rate applied to their operating lease as of December 31, 2023, was 1.04%. This rate is used to calculate the present value of future lease payments, which is a standard accounting practice for operating leases. The FDD also shows the same discount rate was applied as of December 31, 2022.

For a prospective franchisee, understanding the discount rate is important because it affects how Craters & Freighters values its lease obligations on its balance sheet. While the franchisee won't directly use this rate in their own operations, it provides insight into how the franchisor manages its financial liabilities and reports them in their financial statements. This can be an indicator of the franchisor's financial health and stability.

The FDD also provides additional context regarding Craters & Freighters's lease obligations, including the operating lease costs, variable lease costs, total lease costs, and the remaining lease term. Reviewing these figures alongside the discount rate can give a more complete picture of the company's leasing arrangements. It is also important to note that the company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Payments due under the lease contracts include fixed payments.

Franchisees should consider this information as part of their overall due diligence, assessing the franchisor's financial management practices and stability. While a 1.04% discount rate may seem low, it is essential to consider it in the context of the overall lease terms and the company's financial performance. Consulting with a financial advisor can help potential franchisees interpret these financial details and understand their implications.