What is the 'Present value of minimum lease payments' for Franchise & Other Operating Leases for Hardees?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
0 | | 52,474 | | 7,853 | | | | | 2029 | | 97 | | 41,874 | | 7,129 | | | | | Thereafter | | 202 | | 119,002 | | 45,439 | | | | | Total future minimum lease and sublease rent revenue | | 1,193 | $ | 421,166 | $ | 84,409 | | | | | Unearned interest income | | (229) | | | | | | | | | Present value of leases receivable | | 964 | | | | | | | | | Less current portion | | (180) | | | | | | | | | Leases receivable, less current portion | $ | 784 | | | | | | | |
Company as Lessee
The components of lease cost for January 31, 2024 and 2023 are as follows:
| Fiscal 2024 | Fiscal 2023 | |-------------|--------------------------------------------------------------| | | | | $ 1,596 | $ 2,432 | | 1,572 | 1,302 | | 2 | 155 | | 3,170 | 3,889 | | 85,267 | 84,890 | | 1,229 | 1,135 | | 86,496 | 86,025 | | $ 89,666 | $ 89,914 $ 1,596 1,572 2 3,170 85,267 1,229 86,496 | Minimum lease payments for all leases and the present value of minimum lease payments for operating and finance leases as of January 31, 2024 are as follows:
| Finance Leases | Operating Leases |
|---|
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 minimum lease payments for Franchise & Other Operating Leases is $308,107 as of January 31, 2025. This figure represents the discounted value of all future lease payments that Hardees franchisees are obligated to make under their operating lease agreements. The calculation takes into account the time value of money, essentially determining what those future payments are worth in today's dollars.
For a prospective Hardees franchisee, this number is important for understanding the long-term financial commitments associated with leasing a restaurant location. It provides a more accurate picture of the true cost of the lease compared to simply adding up the undiscounted minimum lease payments. The present value is lower than the total minimum lease payments ($337,809) because it factors in the interest rate (or discount rate) applied to future payments. The 'Less amount representing interest' is $29,702.
This information is typically used by franchisees to assess the overall financial feasibility of the franchise and to compare different leasing options. Understanding the present value of lease obligations is crucial for making informed decisions about capital allocation and financial planning. Franchisees should carefully review the lease terms and consult with a financial advisor to fully understand the implications of these lease obligations on their business.