What is the total amount representing interest deducted from the total minimum lease payments for company-operated Hardees finance leases?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
7,853 | | | | | | 2029 | 97 | 42,996 | 7,129 | | | | | | Thereafter | 202 | 123,329 | 45,439 | | | | | | Total future minimum lease and sublease rent revenue | 1,193 | $ 432,506 | $ 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 are as follows:
| Fiscal 2024 | Fiscal 2023 | |
|---|---|---|
| Finance lease cost: | ||
| Amortization of finance lease assets | $ 1,596 | $ 2,432 |
| Interest on finance lease liabilities | 1,572 | 1,302 |
| Variable lease cost | 2 | 173 |
| Total finance lease cost | 3,170 | 3,907 |
| Operating lease cost | 92,340 | 93,249 |
| Variable lease cost | 1,854 | 1,391 |
| Total operating lease cost | 94,194 | 94,640 |
| Total lease cost | $ 97,364 | $ 98,547 |
Minimum lease payments for all leases and
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, the total amount representing interest deducted from the total minimum lease payments for company-operated finance leases is $8,010 for fiscal year 2025. This figure is derived from the total minimum lease payments of $24,363, which includes both the principal and interest components of the lease obligations. The deduction of $8,010 represents the interest portion, leaving the present value of minimum lease payments at $16,353.
This distinction is important for prospective Hardees franchisees because it provides clarity on the actual cost of leasing versus the interest expense incurred over the lease term. Understanding the interest component helps in assessing the true economic impact of lease obligations on the franchisee's financial statements. It also allows for a more accurate comparison of leasing versus purchasing assets.
For franchisees, knowing the interest expense is crucial for tax planning and financial forecasting. Interest expenses are typically tax-deductible, which can reduce the overall tax burden. Additionally, this information is vital for complying with accounting standards related to lease reporting, ensuring transparency and accuracy in financial reporting. Franchisees should consult with financial advisors to fully understand the implications of lease accounting and tax regulations.