What is the present value of the minimum operating lease payments for franchise and other Hardees locations?
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 the minimum operating lease payments for franchise and other locations is detailed in the financial statements. For the fiscal year 2025, the present value of minimum lease payments is $308,107. This figure represents the discounted value of all future lease payments, taking into account the time value of money and an implied interest rate.
These operating leases are distinct from finance leases, which involve a transfer of ownership or a bargain purchase option. Operating leases, on the other hand, are typically shorter-term and do not transfer ownership. The present value calculation is crucial because it provides a more accurate representation of the actual cost of the lease over its entire term, as opposed to simply adding up the undiscounted payments.
A prospective Hardees franchisee should carefully consider these lease obligations, as they represent a significant financial commitment. Understanding the present value helps in assessing the true cost of leasing the property and its impact on the overall profitability of the franchise. It is also important to note that this figure does not include the current portion of the lease obligations, which is accounted for separately. Franchisees should also inquire about factors that could cause these lease payments to change.