Did Goldfish Swim School reassess if expired or existing contracts are or contain a lease?
Goldfish_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
the lease classification for expired or existing leases.
- The Company did not reassess initial direct costs for any existing leases.
- The Company used hindsight to determine the lease term and to assess impairment of the right-of-use assets for existing leases.
Source: Item 22 — CONTRACTS (FDD pages 76–77)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Goldfish Swim School adopted a new accounting pronouncement and reassessed its existing operating lease. As a result, on January 1, 2022, Goldfish Swim School recorded a right-of-use asset of $1,869,195 and a lease liability of $1,869,195 for the existing operating lease. According to the FDD, the adoption of this accounting standard update did not impact retained earnings.
This indicates that Goldfish Swim School has taken steps to comply with current accounting standards regarding leases, which is relevant for franchisees as it provides transparency into the company's financial practices. Understanding how leases are accounted for can be important for franchisees when evaluating the financial health and stability of the franchisor.
For a prospective franchisee, this information highlights the franchisor's attention to financial reporting standards. While the FDD provides this specific instance of reassessment, it does not detail the ongoing process or policy Goldfish Swim School has in place for continually evaluating contracts for embedded leases. It would be prudent for a potential franchisee to inquire about the franchisor's current policies on lease accounting and contract review to ensure continued compliance and transparency.