What is the present value of net future minimum lease payments for a Stretch Zone franchise?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
d 2022 is 4.45 and 5.45 years, respectively. The weighted average discount rate of the remaining leases at December 31, 2023 and 2022 is 1.38%.
Future minimum lease payments are as follows:
| Year Ending December 31, | |
|---|---|
| 2024 | $ 182,981 |
| 2025 | 141,224 |
| 2026 | 136,011 |
| 2027 | 140,092 |
| 2028 | 120,010 |
| Total future minimum lease payments | 720,318 |
| Amount representing interest | (32,507) |
| Present value of net future minimum lease payments | $ 687,811 |
Notes to Financial Statements December 31, 2023 and 2022
NOTE H - LEASE COMMITMENTS (CONTINUED)
Future minimum lease payments under the sublease with the franchise discussed above are as follows:
| 2024 | $ (54,777) | |-----------------------------|---------------------------| | 2025 | (9,174) $ (63,951) | Cash paid for amounts related to operating leases during 2023 and 2022 a
Source: Item 3 — Franchisee/Debtor's Warranties. (FDD pages 263–364)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, there are two different present values of net future minimum lease payments listed. One table shows the present value of net future minimum lease payments is $687,811. This figure is calculated by subtracting the amount representing interest, which is $32,507, from the total future minimum lease payments, which is $720,318. The lease covers the years 2024 through 2028, with amounts ranging from $120,010 to $182,981 per year.
Another table in the 2025 FDD shows the present value of net future minimum lease payments is $911,950. This figure is calculated by subtracting the amount representing interest, which is $136,813, from the total future minimum lease payments, which is $1,048,763. This lease covers the years 2025 through 2029, and also includes a category for 'Thereafter.' The annual lease amounts range from $134,597 to $335,944.
It is important for a prospective Stretch Zone franchisee to understand which lease these figures pertain to. There may be different leases for the corporate office versus individual franchise locations. Understanding the terms of the lease, including the length of the lease, the annual payment amounts, and any interest included in the payments, is essential for assessing the financial obligations of the franchise.