Under what condition does Petro Stopping Center not recognize a lease liability and right-of-use asset?

According to Petro Stopping Center's 2025 Franchise Disclosure Document, a lease liability and right-of-use asset are not recognized if the lease term at the commencement of the agreement is less than 12 months. Instead, Petro Stopping Center recognizes a lease expense in the income statement on a straight-line basis.

For a prospective franchisee, this means that if you enter into a short-term lease agreement (less than 12 months) for any assets related to your Petro Stopping Center franchise, the accounting treatment will be simplified. You won't need to record a lease liability or a right-of-use asset on the balance sheet.

Instead, the lease payments will be directly expensed over the lease term. This can reduce the complexity of financial reporting for short-term leases, as it avoids the need for present value calculations and depreciation schedules associated with lease liabilities and right-of-use assets.