What was the weighted-average discount rate for the Pump It Up operating lease in 2024?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
tal | $ 751,063 | |
NOTE 5 MEMBER'S EQUITY
The Company has one class of membership interests and is 100% owned by a single member.
NOTE 6 OPERATING LEASES
The Company leases space for its corporate headquarters; this lease expires at the end of June 2027 with a five-year renewal option. The facility lease provides for increases in future minimum monthly rental payments at a rate of 3% annually. Monthly payments also include certain common area maintenance charges.
The following table provides quantitative information concerning the Company's leases.
| 2024 | 2023 | |
|---|---|---|
| Operating |
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, the weighted-average discount rate for the operating lease in 2024 was 1.63%. This figure represents the rate used to discount future lease payments to their present value, reflecting the time value of money and the risk associated with the lease.
For a prospective Pump It Up franchisee, understanding the discount rate is crucial for assessing the true cost of leasing property for their franchise location. A higher discount rate would result in a lower present value of lease obligations, while a lower rate, such as the 1.63% reported, would result in a higher present value. This rate is a key component in evaluating the overall financial viability of the franchise, as lease costs are typically a significant expense for businesses like Pump It Up.
It's important to note that this discount rate applies specifically to the operating lease and may not reflect the cost of other financing options or capital investments required to establish and operate a Pump It Up franchise. Franchisees should consult with financial advisors to fully understand the implications of lease terms and discount rates on their investment.