What exemption has Kitchen Solvers elected regarding lease recognition?

According to Kitchen Solvers' 2025 Franchise Disclosure Document, the company has elected the short-term lease recognition exemption for all applicable classes of underlying assets. This means that leases with an initial term of 12 months or less are not recorded on the balance sheet, provided they do not include an option to purchase the underlying asset that Kitchen Solvers is reasonably certain to exercise.

For a Kitchen Solvers franchisee, this accounting policy primarily affects how the company reports its own financial obligations related to short-term leases. It simplifies the accounting for these leases, as they are not recognized as assets or liabilities on the balance sheet. Instead, lease payments are expensed on a straight-line basis over the lease term.

This election is permitted under accounting standards and can reduce the complexity of financial reporting for Kitchen Solvers. However, it's important to note that this exemption only applies to leases with a term of 12 months or less that do not include a purchase option that is likely to be exercised. This accounting treatment is specific to Kitchen Solvers' corporate financial statements and does not directly dictate how franchisees must handle their own lease accounting, although franchisees may find it a useful example for their own short-term leases.