How does Craters & Freighters recognize short-term lease costs?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
For all underlying classes of assets, the Company has elected to not recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. Leases containing termination clauses in which either party may terminate the lease without cause and the notice period is less than 12 months are deemed short-term leases with lease costs included in short-term lease expense. The Company recognizes short-term lease cost on a straight-line basis over the lease term.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, the company has elected not to recognize right-of-use (ROU) assets and lease liabilities for short-term leases. This applies to leases with a term of 12 months or less from the commencement date, and that do not include an option to purchase the underlying asset that the company is reasonably certain to exercise.
Additionally, leases containing termination clauses, where either party can terminate without cause and the notice period is less than 12 months, are also considered short-term leases. The costs associated with these short-term leases are included in short-term lease expense.
Craters & Freighters recognizes these short-term lease costs on a straight-line basis over the lease term. This means that the total lease cost is divided evenly across the duration of the lease, providing a consistent expense recognition each period.