How does Petro Stopping Center allocate payments for lease and non-lease components in agreements?

According to Petro Stopping Center's 2025 Franchise Disclosure Document, agreements may include both lease and non-lease components. Generally, Petro Stopping Center allocates payments for these components on a relative stand-alone selling price basis. This means that the portion of the payment attributed to the lease and the portion attributed to non-lease items (like services or other amenities) are determined by what each would sell for individually.

However, there is an exception to this general rule. For leases of retail service stations, Petro Stopping Center has elected not to separate non-lease payments from the calculation of the lease liability and right-of-use asset. In these cases, the entire payment is treated as part of the lease.

For a prospective franchisee, this means that when leasing a retail service station, the total lease payment will likely include the cost of both the physical space and any additional services or benefits bundled into the lease agreement. This could impact the franchisee's accounting and financial reporting, as it simplifies the allocation process but may not accurately reflect the true cost of the individual components. It is important for potential franchisees to understand this policy and how it may affect their financial statements and tax obligations.