What was the change in operating lease liabilities for Gold Star in 2024?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
| Years Ended December 31, | |||
|---|---|---|---|
| 2024 2023 | (Restated) | ||
| Cash Flows From Operating Activities | |||
| Net Income | $ 2,498,270 $ 1,595,317 | $ 1,936,301 | |
| Reconciliation of Net Income with | |||
| Cash Flows From Operations | |||
| Depreciation | 1,249,072 930,216 | 807,295 | |
| Amortization | 63,323 | 70,168 69,297 | |
| Amortization on Loan Cost | 1 3,492 4 1,695 | 1 2,973 | |
| Loss on Disposal of Property and Equipment | - 4 4,694 | 5,367 | |
| Gain on Early Termination of Lease | - (26,298) | - | |
| Changes In | |||
| Accounts Receivable, Net | 206,833 292,502 | 524,429 | |
| Other Receivables | (589) 229,976 | (67,494) | |
| Inventory | 4 83,139 (354,258) | (479,542) | |
| Prepaid Expenses | 272,464 227,946 | (269,624) | |
| Contract Assets | - 3 6,849 | 1 14,057 | |
| Deposits | 1 43,766 1 0,156 | (239,834) | |
| Right of Use Asset - Operating Leases | 9 75,114 8 81,258 | 6 10,647 | |
| Operating Lease Liabilities | (790,746) (765,735) | (517,628) | |
| Bank Overdraft | - (432,410) | 4 32,410 | |
| Accounts Payable Operating | (755,131) 1,041,601 | (409,194) | |
| Gift Card Liability | 6,158 2,909 | 6,744 | |
| Deferred Franchise Fees | (17,826) (26,558) | (14,609) | |
| Accrued Wages and Other Liabilities | 2 61,526 2 6,786 | (3,854) | |
| Accrued Expenses and Other Liabilities | (205,784) 4 0,485 | (125,691) | |
| Cash Provided by Operating Activities | 4 ,403,081 3,867,299 | 2,392,050 |
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the operating lease liabilities decreased by $273,107 in 2024. The operating lease liabilities were ($790,746) in 2024 and ($517,628) in 2023.
Operating lease liabilities represent Gold Star's financial obligations for using leased assets, such as property or equipment, over the lease term. A decrease in these liabilities could be due to several factors, such as making lease payments, renegotiating lease terms, or terminating leases. For a prospective franchisee, understanding these liabilities is crucial because leases are a common aspect of business operations, especially for restaurant locations.
The decrease in operating lease liabilities suggests that Gold Star reduced its lease obligations during the year. This could free up capital for other investments or reduce the company's overall financial risk. However, it's important to consider the context behind this change. For example, if the decrease was due to terminating leases, it could indicate a change in Gold Star's operational strategy or footprint. A potential franchisee should inquire about the specific reasons for the decrease to fully understand its implications.
Overall, the change in operating lease liabilities provides insights into Gold Star's financial management and leasing strategies. While a decrease can be positive, it's essential to understand the underlying reasons and potential long-term effects on the company's operations and financial health. Prospective franchisees should discuss these details with Gold Star to assess the stability and growth prospects of the franchise system.