What was the total operating lease expense charged to Exit's operations, including amortization of leasehold improvements, as of December 31, 2024?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
and expired on December 1, 2022.
A portion of the lease space was subleased to an unrelated third party under a noncancelable lease agreement that began on August 5, 2022, and expired on August 5, 2024.
A portion of the lease space is subleased to an unrelated third party under a noncancelable lease agreement that began on October 1, 2022, and expires on October 1, 2025.
A portion of the lease space is subleased to an unrelated third party under a monthly lease agreement that began on D
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the total operating lease expense charged to operations, including amortization of leasehold improvements, was $94,117 as of December 31, 2024. This figure is offset by rental income that Exit receives from sublease agreements.
For prospective Exit franchisees, this indicates the cost associated with leasing and maintaining the operational space used by Exit. It's important to note that this expense includes not only the base rent but also the amortization of any leasehold improvements made to the property. Leasehold improvements are physical upgrades or customizations made to a leased space. The amortization of these improvements spreads the cost over the useful life of the improvements or the lease term, whichever is shorter.
The FDD also mentions that Exit subleases a portion of its leased space to unrelated third parties, generating rental income that offsets the lease expense. In 2024, the sublease rental income totaled $51,895. This subleasing strategy can help reduce the overall financial burden of the lease for Exit. Understanding the details of these sublease agreements, including their terms and potential risks, is crucial for assessing the net cost of leasing for Exit.
Prospective franchisees should consider the lease terms, potential for subleasing, and the impact of leasehold improvements when evaluating the overall financial performance of Exit. They should also inquire about the specific terms of the lease agreement, including renewal options and any potential liabilities related to the leased property.