When does Exit's operating lease for office space expire?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2023 | 2022 | ||
|---|---|---|---|
| Deferred revenues – beginning of year | $ 253,796 | $ 317,558 | $ 308,853 |
| Additions for initial franchise fees received | 40,000 | 33,750 | 80,000 |
| Additions for renewal fees received | 25,750 | 19,500 | 28,250 |
| Additions for assignment fees received | 10,750 | 8,625 | 18,000 |
| Reduction for amounts deemed uncollectible | - | (10,100) | - |
| Revenue recognized during the year | (106,088) | (115,536) | (117,545) |
| Deferred revenues – end of year | $ 224,208 | $ 253,796 | $ 317,558 |
Upper Midwest Realty, Inc. d.b.a. Exit Realty Upper Midwest 22 Notes to Financial Statements (continued) December 31, 2024, 2023, and 2022
NOTE 6 – CONTRACT BALANCES (continued)
At December 31, 2024, deferred revenues are expected to be recognized as revenue over the remaining term of the associated franchise agreements as follows:
| 2025 | $ | 96,182 | |
|---|---|---|---|
| 2026 | 63,225 | ||
| 2027 | 34,791 | ||
| 2028 | 20,184 | ||
| 2029 | 9,826 | ||
| Total deferred revenues | $ | 224,208 |
NOTE 7 – OPERATING LEASES
The Company entered into a lease agreement commencing April 3, 2017, for office space in Lakeville, Minnesota. The agreement expires on February 29, 2028, and calls for monthly rent ranging from $3,754 to $6,760. In addition to base rent, the Company is charged for its share of operating expenses and taxes. Included in the terms of the lease is a build-out incentive of $322,000. The deferred lease incentive was being amortized over the life of the lease on a straight-line basis. As of January 1, 2022, the remaining unamortized deferred lease incentive of $189,111 was reclassified to operating lease ROU assets as part of the implementation of ASC 842. The deferred lease incentive was fully amortized as of December 31, 2022.
The lease agr
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the company entered into a lease agreement on April 3, 2017, for office space in Lakeville, Minnesota. The agreement is set to expire on February 29, 2028. The monthly rent ranges from $3,754 to $6,760, and Exit is also responsible for its share of operating expenses and taxes. The lease included a build-out incentive of $322,000, which was amortized over the lease's life.
It's important to note that the landlord has the option to terminate the lease under specific conditions, such as the premises becoming wholly untenantable or experiencing significant damage not covered by insurance. This clause provides the landlord with certain protections and exit strategies under unforeseen circumstances.
Additionally, if Exit remains in possession of the premises after the lease's termination date without a new lease agreement, the company will be considered a month-to-month tenant. In this hold-over situation, the rent will increase to 150% of the annual minimum rent, along with any applicable percentage rent, and all other original lease conditions will remain in effect. This hold-over provision ensures that the landlord is compensated appropriately if Exit continues to occupy the space beyond the agreed-upon term.