What is the present value of lease liabilities, after imputed interest is deducted, for Moes Southwest Grill?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
years through 2044, subject to renewal provisions in certain of the lease agreements.
The components of lease cost were as follows:
| For the fiscal years ended: | 2024 | 2023 | |
|---|---|---|---|
| Operating lease costs | $ 15,590 | $ | 17,486 |
| Variable lease cost | 3,516 | 3,478 | |
| Total operating lease costs | $ 19,106 | $ | 20,964 |
Total operating lease costs include rental expense related to leases for Company SBRs recorded to Company store, bakery and restaurant operations expenses, leased properties that are subsequently subleased
Source: Item 23 — Receipts (FDD pages 92–334)
What This Means (2025 FDD)
According to Moe's Southwest Grill's 2025 Franchise Disclosure Document, the present value of lease liabilities, after deducting imputed interest, is detailed in Item 23, Receipts. For operating leases, the present value of lease liabilities is listed as $68,098. Additionally, there are subleases that contribute a value of $(11,846). These figures represent the discounted value of future lease payments, reflecting the time value of money. Imputed interest, which is the estimated interest included in the total lease payments, has already been subtracted to arrive at these present values.
This information is crucial for prospective Moe's Southwest Grill franchisees as it provides insight into the financial obligations associated with leasing property. Understanding the present value of lease liabilities helps franchisees assess the true cost of their lease commitments. It's important to note that these liabilities are based on the company's incremental borrowing rate, as the rate implicit in the leases is not readily determinable, which is a common practice in lease accounting.
The FDD also indicates that the current portion of these lease liabilities, which is $11,146, represents the amount due within the next year. The remaining balance is classified as long-term operating lease liabilities, totaling $56,952. This breakdown helps franchisees understand the timing of their lease obligations and plan their finances accordingly. Franchisees should carefully review these figures and consult with a financial advisor to fully understand the implications of these lease liabilities on their business.
In summary, the present value of lease liabilities for Moe's Southwest Grill, as reported in the 2025 FDD, provides a clear picture of the financial commitments franchisees will face regarding property leases. By understanding these liabilities, franchisees can make informed decisions and manage their financial resources effectively.