Where are revenues from leasing arrangements with Del Taco franchisees presented in the condensed consolidated statements of earnings?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
As lessor, our leases and subleases primarily consist of restaurants that have been leased to franchisees subsequent to refranchising transactions. The lease descriptions, terms, variable lease payments and renewal options are generally the same as the lessee leases described above. Revenues from leasing arrangements with our franchisees are presented in "Franchise rental revenues" in the accompanying consolidated statements of earnings, and the related expenses are presented in "Franchise occupancy expenses."
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, revenues stemming from leasing arrangements with Del Taco franchisees are specifically listed under "Franchise rental revenues" within the consolidated statements of earnings. Corresponding expenses related to these leasing arrangements are reported as "Franchise occupancy expenses."
This means that if Del Taco owns or leases property and then subleases it to a franchisee, the income received from the franchisee for the use of that property is categorized as franchise rental revenue. The costs Del Taco incurs to maintain that property, such as rent paid to a third-party landlord or maintenance, are classified as franchise occupancy expenses.
For a potential Del Taco franchisee, this is important for understanding the financial structure of the franchise agreement. It clarifies how rental income and associated expenses are accounted for in Del Taco's financial statements, providing transparency into the revenue streams and cost management related to franchised locations.