What is the present value of leases receivable for Hardees as of January 31, 2025?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
|------------------------------------------------|---------------|---------------| | Land | $ 104,028 | $ 118,052 | | Leasehold improvements | 3,916 | 8,147 | | Buildings and improvements | 68,563 | 86,423 | | | 176,507 | 212,622 | | Less accumulated depreciation and amortization | (57,231) | (71,465) | | Total assets leased to others | $ 119,276 | $ 141,157 |
The components of lease income for January 31, 2024 and 2023 are as follows:
| 2024 | 2023 | |
|---|---|---|
| Rent revenue: | ||
| Minimum rent revenue | $ 87,594 | $ 91,482 |
| Variable lease revenue | 6,334 | 6,622 |
| Total rent revenue | $ 93,928 | $ 98,104 |
We sublease to others some of our property under finance leases. These assets are recorded as lease receivables and are included in accounts receivable, net and other assets, net in our accompanying Combined Consolida
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the present value of leases receivable is $964 as of January 31, 2025. This value represents the current worth of future lease payments that Hardees expects to receive from its franchisees related to finance leases.
This figure is calculated by discounting the future minimum lease payments, which total $1,193, to their present value using an appropriate discount rate. The unearned interest income, amounting to $229, is then subtracted from the total future minimum lease and sublease rent revenue to arrive at the present value. The current portion of these leases receivable, which is $180, is deducted to determine the leases receivable, less current portion, which is $784.
For a prospective Hardees franchisee, understanding these lease arrangements is crucial. It indicates the financial obligations and revenue streams associated with subleasing properties from Hardees. The difference between the total future lease payments and their present value reflects the time value of money and the interest component embedded in these lease agreements. Franchisees should carefully review the terms of their sublease agreements to understand their obligations and the potential impact on their financial performance.