Does Goldfish Swim School separate lease and nonlease components for all leases?
Goldfish_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company recognizes expense for operating leases on a straight-line basis over the lease term. The Company made a policy election not to separate lease and nonlease components for all leases. Therefore, all payments are included in the calculation of the right-of-use asset and lease liability.
The Company elected to use the risk-free rate as the discount rate for calculating the right-of-use asset and lease liability in place of the incremental borrowing rate for all leases. As such, the Company considers the U.S. daily treasury par yield curve issued by the U.S. Department of the Treasury to be a risk-free rate.
Source: Item 22 — CONTRACTS (FDD pages 76–77)
What This Means (2025 FDD)
According to the 2025 Goldfish Swim School FDD, the company has made a policy election not to separate lease and nonlease components for all leases. This means that when calculating the right-of-use asset and lease liability, all payments are included in the calculation. This approach simplifies the accounting process for Goldfish Swim School.
For a potential franchisee, this policy has implications for how lease expenses are handled and reported. Since lease and non-lease components are not separated, franchisees can expect a more straightforward calculation of lease-related assets and liabilities. This may reduce the complexity of financial reporting related to leases.
Goldfish Swim School also elected to use the risk-free rate as the discount rate for calculating the right-of-use asset and lease liability, instead of the incremental borrowing rate. The company considers the U.S. daily treasury par yield curve issued by the U.S. Department of the Treasury to be a risk-free rate.