What was the weighted-average discount rate for operating leases for Golden Krust Caribbean Restaurant in 2022?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
party loans from Bakery. This amount is included in the consolidated statements of operations as related party loan forgiveness in other income (expense).
NOTE 8 - LEASES – ASC 842:
The following table provides quantitative information concerning the Company's leases.
| Lease expense | Year Ending December 31, 2022 |
|---|---|
| Operating lease expense | $ 127,315 |
| Other Information | |
| Cash paid for amounts included in the measurement of lease liabilities | |
| Operating cash |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, the weighted-average discount rate for operating leases in 2022 was 1.48%. This figure reflects the average interest rate used to discount future lease payments to their present value, providing a measure of the cost of leasing for Golden Krust Caribbean Restaurant. This discount rate is a critical component in calculating the lease liabilities reported on the company's balance sheet.
For a prospective franchisee, understanding this rate is important as it provides insight into how Golden Krust Caribbean Restaurant accounts for its leases. While this specific rate applies to the franchisor's financial statements, it gives a general indication of the financial environment in which the company operates. Franchisees may encounter similar discount rates when securing leases for their own restaurant locations, although their individual rates will depend on their creditworthiness and specific lease terms.
The FDD also lists other lease-related expenses and information. The operating lease expense for 2022 was $127,315, and the cash paid for amounts included in the measurement of lease liabilities was $87,184. Additionally, ROU (Right-of-Use) assets obtained in exchange for new operating lease liabilities amounted to $686,739. The weighted-average remaining lease term for operating leases was 9.3 years.
These figures provide a comprehensive view of Golden Krust Caribbean Restaurant's leasing activities and financial obligations. A potential franchisee can use this information to better understand the financial dynamics of the company and to prepare for their own lease-related expenses and obligations when setting up their franchise location.