What was the weighted-average discount rate for operating leases for Lees Famous Recipe in 2024?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
se was $1,526,292, $438,532, and $390,433 for the years ended December 31, 2024, 2023, and 2022, respectively. These costs are recognized as lease expense in the period incurred.
NOTE 6 - LEASES (Continued)
The following table presents supplemental information pertaining to the operating leases as of and the for the years ended December 31, 2024 and 2023.
| | 2024 | 2023 | |----------------------------------------------------------------
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 69)
What This Means (2025 FDD)
According to Lees Famous Recipe's 2025 Franchise Disclosure Document, the weighted-average discount rate for operating leases in 2024 was 11.86%. This figure reflects the average rate used to discount future lease payments to their present value, providing a measure of the cost of leasing relative to the value of the leased assets. In 2023, the weighted-average discount rate for operating leases was 8.00%.
For a prospective Lees Famous Recipe franchisee, understanding the discount rate is crucial because it affects how lease liabilities are valued on the balance sheet. A higher discount rate, such as the 11.86% in 2024, generally indicates a higher perceived risk or cost associated with the leases, which can impact the overall financial health and attractiveness of the franchise. This rate is used in calculating the present value of future lease payments, which directly affects the reported lease liabilities.
The FDD also provides other relevant lease information. The operating cash outflows from operating leases were $1,185,841 in 2024, compared to $383,501 in 2023. Additionally, the value of ROU (Right-of-Use) assets obtained in exchange for operating lease liability was $10,400,343 in 2024, whereas there was no such value reported in 2023. The weighted-average remaining lease term in years for operating leases was 31.08 in 2024, compared to 18.83 in 2023. These figures provide context for the scale and duration of Lees Famous Recipe's leasing commitments.
Prospective franchisees should consider these lease-related figures in their overall assessment of the franchise opportunity. Understanding the terms and costs associated with leasing, as reflected in the discount rate and other lease metrics, is essential for making informed financial decisions and evaluating the long-term viability of the franchise.