What was the change in lease liability for Crave Cookies in 2022?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
lities, end of year | $ 1,279,141 | $ 654,671 |
Note 3. Operating Leases - ASC 842
Accounting Policies
The Company determines if an arrangement is a lease or contains a lease at inception. Leases result in the recognition of ROU assets and lease liabilities on the balance sheets. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease, measured on a discounted basis. The Company determines lease classification as operating or finance at the lease commencement date.
Crave Cookies Franchising, LLC Notes to Financial Statements December 31, 2023 and 2022
At lease commencement, the lease liability is measured at the present value of the lease payments over the lease term. The ROU asset equals the lease liability adjusted for any initial direct costs, prepaid or deferred rent, and lease incentives. The Company has made a policy election to use a risk-free rate (the rate of a zero-coupon U.S. Treasury instrument) for the initial and subsequent measurement of all lease liabilities. The risk-free rate is determined using a period comparable with the lease term.
The lease term may include options to extend or to terminate the lease that the Company is reasonably certain to exercise. Lease expense is generally recognized on a straight-line basis over the lease term.
The Company has elected not to record leases with an initial term of 12 months or less on the balance sheets. Lease expense on such leases is recognized on a straight-line basis over the lease term.
Nature of Leases
The Company has entered into the following lease arrangements:
Operating Leases
The Company leased a vehicle that expired in 2023 and had monthly payments of $674.
In 2023, the Company entered into a new vehicle lease that expires in 2025 and has monthly payments of $576. Termination of the lease is generally prohibited unless there is a violation under the lease agreement.
All Leases
The Company has no material related-party leases.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
Based on the 2025 Crave Cookies Franchise Disclosure Document, information regarding the specific change in lease liability for 2022 is not available. While the document discusses the company's accounting policies regarding operating leases, including the recognition of right-of-use (ROU) assets and lease liabilities, it does not provide the actual lease liability figures for 2022 or a comparison to the previous year.
The FDD does mention that the company had a vehicle lease that expired in 2023 with monthly payments of $674 and entered into a new vehicle lease in 2023 that expires in 2025 with monthly payments of $576. However, this information does not directly address the overall lease liability change for the company in 2022.
A prospective Crave Cookies franchisee should inquire directly with the franchisor about the company's lease liabilities and how they have changed over time. Understanding these liabilities can provide a clearer picture of the company's financial obligations and overall financial health. Specifically, it would be beneficial to request the balance sheet figures for lease liabilities for 2021, 2022, and 2023 to understand the trend and any significant changes.