What was the variable lease cost for Precision Door Service in 2023?
Precision_Door_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
costs are not included in the measurement of the ROU asset or lease liability due to unpredictability of the payment amount and are recorded as lease expense in the period incurred. The ROU asset is adjusted to account for previously recorded lease-related expenses such as deferred rent and other lease liabilities.
The components of lease cost are as follows (in thousands):
| | December 31, | | | | |-----------------------------------------------
Source: Item 21 — Financial Statements (FDD page 91)
What This Means (2025 FDD)
According to the 2025 FDD, Precision Door Service's variable lease cost for the year ended December 31, 2023, was $272. This figure represents costs that are not fixed in the lease agreement, such as those tied to real estate taxes or building operating expenses. These costs are unpredictable and recorded as lease expenses when they are incurred.
For a prospective Precision Door Service franchisee, understanding variable lease costs is crucial for budgeting and financial planning. Unlike fixed rent, variable costs can fluctuate, impacting profitability. Franchisees should carefully review lease agreements to understand what factors could influence these variable costs and how they are calculated.
It's important to note that these variable lease costs are not included in the measurement of the Right-of-Use (ROU) asset or lease liability due to their unpredictable nature. Instead, they are expensed in the period they are incurred. This accounting treatment reflects the uncertainty associated with these costs and their direct impact on the income statement during the relevant period.
Prospective franchisees should discuss with Precision Door Service the typical range of variable lease costs experienced by other franchisees to better anticipate these expenses. They should also seek professional advice to fully understand the implications of variable lease costs on their financial performance.