What was the total lease cost for Precision Door Service as of December 31, 2023?
Precision_Door_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
| Years ending December 31, | Operating leases | Finance leases | Total |
|---|---|---|---|
| 2025 | $ 6,132 | $ 6,692 | $ 12,823 |
| 2026 | 5,057 | 6,941 | 11,998 |
| 2027 | 3,423 | 2,854 | 6,277 |
| 2028 | 2,902 | 1,134 | 4,035 |
| 2029 | 2,029 | 210 | 2,240 |
| Thereafter | 4,089 | - | 4,089 |
| Total lease payments | $ 23,631 | $ 17,831 $ | 41,462 |
| Less: Interest | 2,591 | 1,612 | 4,203 |
| Total lease liabilities | $ 21,040 | $ 16,219 $ | 37,258 |
| Less: Current lease liabilities | 5,401 | 5,941 | 11,342 |
| Non-current lease liabilities | $ 15,639 | $ 10,278 | $ 25,917 |
Rent expense for operating lease
Source: Item 21 — Financial Statements (FDD page 91)
What This Means (2025 FDD)
According to Precision Door Service's 2025 Franchise Disclosure Document, the total lease cost for the year ended December 31, 2023, was $13,926. This figure includes finance lease costs and variable lease costs. In comparison, the rent expense for operating leases alone was $7,855 for the same period.
For a prospective franchisee, understanding the composition of these lease costs is crucial. Operating leases, variable lease costs, and finance leases each have different accounting and tax implications. Operating leases generally cover the use of an asset, while finance leases are similar to loans where the franchisee gains ownership over time. Variable lease costs might fluctuate based on usage or other factors.
It's important to note that these figures reflect Precision Door Service's overall lease expenses, not necessarily the costs a franchisee would incur. A franchisee's lease costs will depend on their specific location, the size of their premises, and the terms negotiated with their landlord. Franchisees should carefully consider these factors and consult with financial advisors to project their own lease-related expenses accurately.
Prospective franchisees should also inquire about any potential changes in lease costs or terms that may arise during the franchise agreement. Understanding these costs is essential for accurate financial planning and ensuring the long-term profitability of the franchise.