What are the total lease liabilities for a Crave Cookies franchise as of December 31, 2023?
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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
Based on the 2025 Crave Cookies Franchise Disclosure Document, the company recognizes lease liabilities on the balance sheets for leases with a term of more than 12 months. These liabilities represent the obligation to make lease payments, measured on a discounted basis, arising from the lease. The company determines if an arrangement contains a lease at the inception of the agreement.
The lease liability is initially measured at the present value of the lease payments over the lease term. The right-of-use (ROU) asset equals the lease liability adjusted for any initial direct costs, prepaid or deferred rent, and lease incentives. Crave Cookies uses a risk-free rate, based on a zero-coupon U.S. Treasury instrument, for the measurement of all lease liabilities.
The provided excerpts from the 2025 FDD do not contain the specific total lease liabilities for Crave Cookies as of December 31, 2023. The FDD does mention that in 2023, Crave Cookies entered into a new vehicle lease that expires in 2025 with monthly payments of $576. To obtain the total lease liabilities, a prospective franchisee should inquire directly with Crave Cookies for the complete financial statements and related details.