Does Pearce Bespoke have an operating lease for office space?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
| Deferred Commissions | Non-refundable Franchise Fees | ||
|---|---|---|---|
| Year ending December 31: | |||
| 2025 | $ | 79,960 | $ 139,500 |
| 2026 | 79,960 | 90,000 | |
| 2027 | 79,960 | 90,000 | |
| 2028 | 79,960 | 90,000 | |
| 2029 | 79,960 | 90,000 | |
| Thereafter | 301,884 | 314,298 | |
| $ | 701,684 | $ 813,798 | |
| NOTE 3 – NOTES PAYABLE | |||
| Notes payable consist of the following at December 31, | 2024 | ||
| Note payable with a bank. Face amount of $150,000, payable in 54 | in July 2025. | $ 97,508 | |
| weekly installments of $3,528 including a fixed fee of 27% of the | |||
| face amount of the note. Final payment is due | |||
| Collateralized by the assets | |||
| of the Company. | |||
| Note payable with a bank. Face amount of $155,100, payable in | in | ||
| monthly minimum payments of $19,818 every two months or 25% | |||
| of accounts receivable presented for payment processing including | |||
| a fix fee of 13% of the principal amount. Final payment is due | |||
| March 2026. Collateralized by accounts receivable. | 68,874 166,382 | ||
| Less current maturities | 166,382 $ - |
NOTE 4 – RIGHT TO USE ASSET AND LEASE LIABILTY
On November 21, 2023, under the guidance of ASC 842 "Leases", the Company recorded a right to use asset and lease liability for the lease of office space. As of January 1, 2024, the remaining initial lease term was 22 months, through October 2025. Lease payments over the term are between $2,000 and $2,150. The right to use asset and lease were recorded as an operating lease. The right to use asset and lease liability were valued using the monthly lease payments over the initial term of the lease using a 4.95% discount rate based on the lessee borrowing rate at the inception of the lease. Total lease expense recorded for the year ended December 31, 2024, was $23,760. The value of the right to user asset was $19,670 as of December 31, 2024, and the value of lease payable was $21, 020
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke FDD, the company has an operating lease for office space. Note 4 in Item 21 indicates that on November 21, 2023, Pearce Bespoke recorded a right to use asset and lease liability for the lease of office space. As of January 1, 2024, the remaining initial lease term was 22 months, set to end in October 2025. The lease payments range between $2,000 and $2,150. The total lease expense recorded for the year ended December 31, 2024, was $23,760. The value of the right to use asset was $19,670 as of December 31, 2024, and the value of lease payable was $21,020 as of December 31, 2024. Future minimum payments of the lease, including unamortized interest, for the year ending December 31, 2025, are $21,500.
This information is relevant for prospective franchisees as it provides insight into the franchisor's financial obligations and operational costs. Understanding the lease commitments of Pearce Bespoke can help franchisees assess the financial stability and management practices of the company. The lease was valued using the monthly lease payments over the initial term of the lease using a 4.95% discount rate based on the lessee borrowing rate at the inception of the lease.
Additionally, Note 8 in Item 21 states that Pearce Bespoke has an operating lease for office space. 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.