What factors might influence the operating lease cost for an Expense Reduction Analysts franchise?
Expense_Reduction_Analysts Franchise · 2025 FDDAnswer from 2025 FDD Document
| Richmond, TX 77407 | | |Future maturities of notes payable is as follows for the years ended:
| Year Ending December 31, | Amount |
|---|---|
| 2025 | 33,649 |
| 2026 | 33,649 |
| 2027 | 33,650 |
| Total | $ 100,948 |
NOTE 7 OPERATING LEASES
The Company leases its office space under a noncancellable operating lease. The monthly rental amount is $5,246 and $5,137 at December 31, 2024 and 2023, respectively. Total rental expense under that agreement was $59,642 and $62,511 for the years ended December 31, 2024 and 2023, respectively.
NOTE 7 OPERATING LEASES (CONTINUED)
Qualitative Information concerning the Company's lease for the year ended December 31:
| Operating Lease Cost | $ 63,648 | 65,203 |
|---|---|---|
| Operating Cash Flows from Operating Leases | $ 62,077 | 65,163 |
| Right-of-Use Assets Obtained in Exchange for | ||
| Operating Lease Liabilities | $ - | 236,135 |
| Weighted Average Remaining Lease Term | 2.7 Years | 3.7 Years |
| Weighted Average Discount Rate | 4.82% | 4.82% |
A maturity analysis of annual undiscounted cash flows for lease liabilities as of December 31, 2024, is as follows:
| Entity Name | Franchisee Name | City, State | Telephone Numbe
Source: Item 23 — RECEIPTS (FDD pages 58–215)
What This Means (2025 FDD)
According to Expense Reduction Analysts's 2025 Franchise Disclosure Document, several factors can influence the operating lease cost. The company leases its office space under a noncancellable operating lease. The monthly rental amount was $5,137 at December 31, 2023, and $5,577 at December 31, 2022. The total rental expense under this agreement was $62,511 for the year ended December 31, 2023, and $59,207 for the year ended December 31, 2022.
Scheduled rent increases also affect operating lease costs. Expense Reduction Analysts records rent expense under operating leases with scheduled rent increases on a straight-line basis over the life of the lease. This practice results in temporary differences between rent expense and scheduled rent payments, which are recorded as deferred rent on the balance sheets and reversed over time.
Additional factors influencing operating lease costs include the lease term, which was a weighted average of 2.7 years, and the weighted average discount rate, which was 4.82% as of the balance sheet date. These figures provide insight into how Expense Reduction Analysts manages and accounts for its operating leases, which can be helpful for prospective franchisees to understand the company's financial practices.