Under what conditions has Focalpoint Coaching elected the short-term lease practical expedient?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
| $ 2,691 2,691 | |
|---|---|
| 2027 | 2,691 |
| 2028 | 2,691 |
| 2029 | 2,691 |
| Thereafter | 24,224 $ 37,679 |
Note 4. Leases
The Company has one (1) lease arrangement under which it is the lessee. The Company leases an office on a month-to-month basis requiring fixed monthly rental amounts.
The Company elected the short-term lease practical expedient (a lease that at commencement date has a lease term of twelve (12) months or less and does not contain an option that the lease is reasonably certain to exercise) related to the lease of its office space.
Source: Item 21 — Financial Statements (FDD page 56)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, the company has elected the short-term lease practical expedient for its office space lease. This election is applicable because the lease meets specific criteria: the lease term at commencement is twelve months or less, and it does not include an option for renewal that Focalpoint Coaching is reasonably certain to exercise. This accounting treatment simplifies the way Focalpoint Coaching reports its lease obligations on its financial statements.
For a prospective Focalpoint Coaching franchisee, this information provides insight into how the franchisor manages its own lease obligations and applies accounting standards. The short-term lease practical expedient is a common election for businesses that lease property on a short-term basis, as it avoids the more complex accounting required for longer-term leases.
The FDD indicates that Focalpoint Coaching recognized short-term operating lease expenses of $1,500 in both 2023 and 2024. This consistent expense suggests a stable, short-term rental arrangement for their office space. This detail offers a glimpse into the franchisor's operational costs and their approach to managing lease agreements, which could be relevant for franchisees as they consider their own potential leasing needs and expenses.