What portion of the full lease arrangement is reflected in Face Foundrie's financial statements?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company has adopted ASC 842, Leases, which requires lessees to recognize the assets and liabilities that arise from operating and finance leases on the balance sheets, with a few exceptions. The Company has a shared operating lease agreement with multiple related parties to warehouse and office space from the related parties common owner. The Company has reflected one third of the full lease arrangement in its financial statements to reflect the Company's share of the obligation. Were other related parties unable to meet their obligations, it is likely the Company would bear responsibility for the larger lease obligation.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 73)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, the company shares an operating lease agreement with related parties for warehouse and office space. The financial statements reflect one-third of the full lease arrangement, representing Face Foundrie's share of the obligation. This shared lease involves related parties with a common owner.
This arrangement means that Face Foundrie's financial obligations, as presented, only account for its portion of the total lease. However, the FDD notes a potential risk: if the other related parties are unable to meet their lease obligations, Face Foundrie might have to bear responsibility for the larger lease obligation. This could significantly impact the company's financial stability and is a crucial consideration for prospective franchisees.
For a potential Face Foundrie franchisee, this information highlights the importance of understanding the full scope of the lease agreement and the financial health of the related parties involved. While the financial statements show a manageable lease obligation, the risk of assuming a larger portion of the lease should be carefully evaluated. It would be prudent to inquire about the details of the shared lease agreement and the financial stability of the other parties involved to fully assess the potential financial risks.