Is the exercise of lease renewal options at Pearce Bespoke's sole discretion?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
Leases – The Company has an operating lease for office space. The Company assesses whether an arrangement qualifies as a lease (i.e., conveys the right to control the use of an identified asset for a period of time in exchange for consideration) at inception and only reassesses its determination if the terms and conditions of the arrangement are changed. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized for these leases on a straight-line basis over the lease term. As the lease does not provide an implicit rate, the Company elected to use the riskfree based on the information available at the commencement date in determining the present value of lease payments. The lease has a remaining lease term of approximately 2 years, which includes an option to extend the lease for 1 year. The lease includes escalations of payment amounts throughout the lease term. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of assets are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the decision to exercise lease renewal options for the company's office space is at Pearce Bespoke's sole discretion. The document states that the company has an operating lease for office space with a remaining lease term of approximately 2 years, which includes an option to extend the lease for 1 year.
This means that Pearce Bespoke, not the franchisee, has the power to decide whether or not to renew the lease for their corporate office. This detail is found within the financial statements' notes, specifically regarding the company's accounting policies for leases.
For a prospective franchisee, this information is relevant for understanding Pearce Bespoke's financial obligations and operational planning. While it doesn't directly impact the franchisee's lease for their own business location, it provides insight into how Pearce Bespoke manages its own lease agreements and financial commitments. Franchisees usually handle their own location leases, so this clause pertains to Pearce Bespoke's corporate overhead.