What were the operating cash outflows from operating leases for Lees Famous Recipe in 2023?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2023 | 2022 | |
|---|---|---|
| Goodwill | $ 23,239,686 | $ 22,612,893 |
| Less: accumulated amortization | (5,309,013) | (3,031,740) |
| Total goodwill, net | $ 17,930,673 | $ 19,581,153 |
Amortization expense was $2,277,273, $2,478,694 and $553,046 for the years ended December 31, 2023 and 2022, and for the period ended December 31, 2021, respectively.
NOTE 6 - LEASES
The Company leases multiple pieces of property in Florida and Ohio, with one property serving as the corporate headquarters and the remaining properties housing Company-owned restaurants. As of December 31, 2023 and 2022, the ROU assets related to the operating leases were $3,461,836 and $3,613,721 and the operating lease liabilities totaled $3,570,601 and $3,666,778, respectively. Operating lease expense was $438,532 and $390,433 for the years ended December 31, 2023 and 2022, respectively. These costs are recognized as variable lease expense in the period incurred. The following table presents supplemental information pertaining to the operating lease as of and the for the year ended December 31, 2023.
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Source: Item 21 — FINANCIAL STATEMENTS (FDD page 69)
What This Means (2025 FDD)
According to Lees Famous Recipe's 2025 Franchise Disclosure Document, the operating cash outflows from operating leases in 2023 were $383,501. This figure represents the actual cash payments made by Lees Famous Recipe during that year for the use of leased properties.
For a prospective franchisee, understanding these cash outflows is crucial because it provides insight into the company's financial obligations related to its leases. This can be an indicator of the company's financial health and its ability to manage its lease commitments. It also allows potential franchisees to compare these outflows with those of previous years to identify any trends or changes in the company's leasing activities. In 2022, the operating cash outflows were $330,081.
Furthermore, the FDD provides additional context by including the weighted-average remaining lease term in years for operating leases, which was 18.83 years in 2023, and the weighted-average discount rate for operating leases, which was 8.00%. These figures, along with the cash outflow amount, offer a comprehensive view of Lees Famous Recipe's leasing arrangements and their financial implications. Understanding these details can help a franchisee assess the stability and predictability of the company's financial position.