What is the present value discount applied to the total operating lease payments for Monicals Pizza?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
| Year ending December 31: | |||
| 2024 | $ | 910,225 | $ 375,922 |
| 2025 | 875,359 | 365,514 | |
| 2026 | 789,509 | 277,987 | |
| 2027 | 662,518 | 160,335 | |
| 2028 | 558,856 | 46,725 | |
| Thereafter | 1,969,583 | - | |
| Total lease payments | 5,766,050 | 1,226,483 | |
| Less present value discount | (401,448) | (68,985) | |
| Total lease liabilities | 5,364,602 | 1,157,498 | |
| Less current portion | (811,560) | (343,795) | |
| Long-term lease liabilities | $ | 4,553,042 | $ 813,703 |
See Note 10 for disclosures surrounding future minimum commitments for related parties.
The following table includes supplemental cash flow and noncash information related to the leases for the year ended December 31, 2023 and 2022:
| 2023 | 2022 | |
|---|---|---|
| Cash paid for amounts included in the | ||
| measurement of lease liabilities: | ||
| Operating cash flows from operating leases | $ 892,707 | $ 876,522 |
| Operating cash flows from finance leases | 34,864 | 16,152 |
| Financing cash flows from finance leases | 362,606 | 212,222 |
| Right-of-use assets obtained in exchange | ||
| for lease liabilities: | ||
| Operating leases | 231,199 | 285,919 |
| Finance leases | 489,764 | 1,243,573 |
NOTE 9 – EMPLOYEE RETIREMENT PLAN
The Company maintains a profit sharing and 401(k) plan for all employees, with the exception of leased and other employees as defined in
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to the 2025 FDD, Monicals Pizza provides information on operating and finance leases. For the year ending December 31, 2024, the present value discount applied to total operating lease payments is $401,448. The present value discount applied to total finance leases is $68,985. The total lease payments for operating leases is $5,766,050, which is reduced to a total lease liability of $5,364,602 after applying the present value discount.
For the year ending December 31, 2025, the present value discount applied to total operating lease payments is $326,245, while the present value discount for finance leases is $40,733. The total lease payments for operating leases is $5,103,234, which decreases to a total lease liability of $4,776,989 after the discount.
Prospective Monicals Pizza franchisees should consider these present value discounts when evaluating the overall cost of leasing, as it significantly impacts the stated total lease liabilities. Understanding the difference between total lease payments and total lease liabilities after the present value discount is crucial for accurate financial planning.