What was the total lease liability for Crawlspace Medic as of December 31, 2023?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
f the individual lease terms.
Amounts reported on the balance sheet as of December 31, 2023 and 2022 were as follows:
| Operating Leases: | 2023 | 2022 | |
|---|---|---|---|
| ROU asset | $ 35,224 | $ 35,224 | |
| ROU amortization | (14,090) | (7,045) | |
| Total ROU Asset, Net | $ 21,135 | 28,179 | |
| Lease liability: | |||
| Current portion of lease liability | $ 7,054 | 6, |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, the company's total lease liability as of December 31, 2023, was $19,968. This amount is broken down into two components: the current portion of the lease liability, which is $7,054, and the non-current portion, which is $12,914.
This lease liability stems from Crawlspace Medic's operating lease agreement for its office space at 1049 Second Avenue, LLC. The lease commenced on June 1, 2021, with a term of 54 months, expiring on December 31, 2026. The agreement includes shared costs with other companies under the ownership of Home Brands. Crawlspace Medic factors in any renewal options into the right-to-use asset and lease liability if those options are reasonably certain to be exercised.
The establishment of this lease liability and associated right-of-use (ROU) asset is a result of adopting FASB ASC 842, Leases, which Crawlspace Medic implemented on January 1, 2022. This accounting standard requires the recognition of lease assets and liabilities on the balance sheet, reflecting the rights and obligations created by leases with terms exceeding one year. The lease liability is based on the present value of future lease payments, discounted using the company's borrowing rate.
For a prospective franchisee, understanding Crawlspace Medic's lease obligations can provide insight into the company's financial commitments and how they manage their operational expenses. While franchisees typically handle their own location leases, this information offers a view into the franchisor's financial practices and stability.