Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Feb. 26, 2024 | Jul. 01, 2023 | |
Document and Entity Information | |||
Entity Registrant Name | WINMARK CORPORATION | ||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 30, 2023 | ||
Document Transition Report | false | ||
Entity File Number | 000-22012 | ||
Entity Incorporation, State or Country Code | MN | ||
Entity Tax Identification Number | 41-1622691 | ||
Entity Address, Address Line One | 605 Highway 169 North, Suite 400 | ||
Entity Address, City or Town | Minneapolis | ||
Entity Address, State or Province | MN | ||
Entity Address, Postal Zip Code | 55441 | ||
City Area Code | 763 | ||
Local Phone Number | 520-8500 | ||
Title of 12(b) Security | Common Stock, no par value per share | ||
Trading Symbol | WINA | ||
Security Exchange Name | NASDAQ | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 759,915,375 | ||
Entity Common Stock, Shares Outstanding | 3,497,430 | ||
Current Fiscal Year End Date | --12-30 | ||
Entity Central Index Key | 0000908315 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Auditor Name | GRANT THORNTON LLP | ||
Auditor Firm ID | 248 | ||
Auditor Location | Minneapolis, Minnesota |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) | Dec. 30, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 13,361,500 | $ 13,615,600 |
Restricted cash | 25,000 | 65,000 |
Receivables, less allowance for credit losses of $600 and $800 | 1,475,300 | 1,438,600 |
Net investment in leases - current | 75,100 | 344,900 |
Income tax receivable | 31,400 | 558,700 |
Inventories | 386,100 | 770,600 |
Prepaid expenses | 1,392,100 | 1,310,400 |
Total current assets | 16,746,500 | 18,103,800 |
Net investment in leases - long-term | 0 | 5,400 |
Property and equipment: | ||
Furniture and equipment | 3,602,900 | 3,484,200 |
Building and building improvements | 2,952,100 | 2,952,100 |
Less - accumulated depreciation and amortization | (4,885,200) | (4,731,700) |
Property and equipment, net | 1,669,800 | 1,704,600 |
Operating lease right of use asset | 2,425,900 | 2,716,000 |
Intangible assets, net | 2,994,300 | 3,348,300 |
Goodwill | 607,500 | 607,500 |
Other assets | 471,300 | 429,700 |
Deferred income taxes | 4,052,400 | 3,540,400 |
Total assets | 28,967,700 | 30,455,700 |
Current Liabilities: | ||
Notes payable, net of unamortized debt issuance costs of $32,100 and $32,100 | 4,217,900 | 4,217,900 |
Accounts payable | 1,719,400 | 2,122,000 |
Accrued liabilities | 2,858,200 | 2,611,700 |
Deferred revenue | 1,666,100 | 1,643,900 |
Total current liabilities | 10,461,600 | 10,595,500 |
Long-term Liabilities: | ||
Line of credit/Term loan | 30,000,000 | 30,000,000 |
Notes payable, net of unamortized debt issuance costs of $96,700 and $120,800 | 34,848,800 | 39,066,700 |
Deferred revenue | 7,657,500 | 6,974,200 |
Operating lease liabilities | 3,715,800 | 4,287,000 |
Other liabilities | 1,440,100 | 1,164,400 |
Total long-term liabilities | 77,662,200 | 81,492,300 |
Commitments and Contingencies (Note 12) | ||
Shareholders' Equity (Deficit): | ||
Common stock, no par value, 10,000,000 shares authorized, 3,496,977 and 3,459,673 shares issued and outstanding | 7,768,800 | 1,806,700 |
Retained earnings (accumulated deficit) | (66,924,900) | (63,438,800) |
Total shareholders' equity (deficit) | (59,156,100) | (61,632,100) |
Total liabilities and shareholders' equity (deficit) | $ 28,967,700 | $ 30,455,700 |
CONSOLIDATED CONDENSED BALANC_2
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 30, 2023 | Dec. 31, 2022 |
CONSOLIDATED CONDENSED BALANCE SHEETS | ||
Receivables, allowance for doubtful accounts | $ 600 | $ 800 |
Unamortized debt issuance costs - Current | 32,100 | 32,100 |
Unamortized debt issuance costs - Noncurrent | $ 88,700 | $ 120,800 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 3,496,977 | 3,635,806 |
Common stock, shares outstanding | 3,459,673 | 3,459,673 |
CONSOLIDATED CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Revenue: | |||
Leasing income | $ 4,766,200 | $ 6,937,700 | $ 11,148,300 |
Total revenue | 83,243,500 | 81,410,800 | 78,216,200 |
Cost of merchandise sold | 4,461,500 | 3,712,800 | 2,940,500 |
Leasing expense | 398,300 | 984,700 | 1,850,300 |
Provisions for credit losses | (5,600) | (57,900) | (206,600) |
Selling, general and administrative expenses | 25,108,700 | 23,158,400 | 22,295,800 |
Income from operations | 53,280,600 | 53,612,800 | 51,336,200 |
Interest expense | (3,091,000) | (2,914,900) | (1,453,900) |
Interest and other income | 1,171,700 | 85,600 | (15,000) |
Income before income taxes | 51,361,300 | 50,783,500 | 49,867,300 |
Provision for income taxes | (11,183,200) | (11,358,600) | (9,947,400) |
Net income | $ 40,178,100 | $ 39,424,900 | $ 39,919,900 |
Earnings per share - basic (in dollars per share) | $ 11.55 | $ 11.30 | $ 10.87 |
Earnings per share - diluted (in dollars per share) | $ 11.04 | $ 10.97 | $ 10.48 |
Weighted average shares outstanding - basic | 3,479,936 | 3,487,732 | 3,671,980 |
Weighted average shares outstanding - diluted | 3,640,524 | 3,592,456 | 3,810,480 |
Royalties | |||
Revenue: | |||
Revenue | $ 70,230,700 | $ 67,148,100 | $ 60,779,300 |
Merchandise sales | |||
Revenue: | |||
Revenue | 4,761,100 | 3,921,600 | 3,100,100 |
Franchise fees | |||
Revenue: | |||
Revenue | 1,512,000 | 1,575,400 | 1,496,900 |
Other | |||
Revenue: | |||
Revenue | $ 1,973,500 | $ 1,828,000 | $ 1,691,600 |
CONSOLIDATED CONDENSED STATEM_2
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) | Common Stock | Retained Earnings (Accumulated Deficit). | Total |
BALANCE at Dec. 26, 2020 | $ 9,281,800 | $ (20,660,500) | $ (11,378,700) |
BALANCE (in shares) at Dec. 26, 2020 | 3,756,028 | ||
Shareholders' Equity (Deficit) | |||
Repurchase of common stock | $ (19,037,300) | (25,180,200) | (44,217,500) |
Repurchase of common stock (in shares) | (225,839) | ||
Stock options exercised | $ 8,320,000 | 8,320,000 | |
Stock options exercised (in shares) | 105,617 | ||
Compensation expense relating to stock options | $ 1,435,500 | 1,435,500 | |
Cash dividends | (33,162,600) | (33,162,600) | |
Comprehensive income (Net income) | 39,919,900 | 39,919,900 | |
BALANCE at Dec. 25, 2021 | (39,083,400) | (39,083,400) | |
BALANCE (in shares) at Dec. 25, 2021 | 3,635,806 | ||
Shareholders' Equity (Deficit) | |||
Repurchase of common stock | $ (4,597,400) | (44,522,400) | (49,119,800) |
Repurchase of common stock (in shares) | (226,165) | ||
Stock options exercised | $ 4,751,700 | 4,751,700 | |
Stock options exercised (in shares) | 50,032 | ||
Compensation expense relating to stock options | $ 1,652,400 | 1,652,400 | |
Cash dividends | (19,257,900) | (19,257,900) | |
Comprehensive income (Net income) | 39,424,900 | 39,424,900 | |
BALANCE at Dec. 31, 2022 | $ 1,806,700 | (63,438,800) | $ (61,632,100) |
BALANCE (in shares) at Dec. 31, 2022 | 3,459,673 | 3,635,806 | |
Shareholders' Equity (Deficit) | |||
Stock options exercised | $ 4,009,700 | $ 4,009,700 | |
Stock options exercised (in shares) | 37,304 | ||
Compensation expense relating to stock options | $ 1,952,400 | 1,952,400 | |
Cash dividends | (43,664,200) | (43,664,200) | |
Comprehensive income (Net income) | 40,178,100 | 40,178,100 | |
BALANCE at Dec. 30, 2023 | $ 7,768,800 | $ (66,924,900) | $ (59,156,100) |
BALANCE (in shares) at Dec. 30, 2023 | 3,496,977 | 3,496,977 |
CONSOLIDATED CONDENSED STATEM_3
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
OPERATING ACTIVITIES: | |||
Net Income | $ 40,178,100 | $ 39,424,900 | $ 39,919,900 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation of property and equipment | 418,700 | 411,400 | 430,600 |
Amortization of intangible assets | 354,000 | 191,700 | |
Provisions for credit losses | (5,600) | (57,900) | (206,600) |
Compensation expense related to stock options | 1,952,400 | 1,652,400 | 1,435,500 |
Deferred income taxes | (512,000) | (287,700) | (1,362,000) |
Loss from disposal of property and equipment | (9,400) | ||
Deferred initial direct costs | (2,100) | ||
Amortization of deferred initial direct costs | 18,900 | ||
Operating lease right of use asset amortization | 290,100 | 266,000 | 244,300 |
Tax benefits on exercised stock options | 1,138,500 | 858,300 | 2,479,600 |
Change in operating assets and liabilities: | |||
Receivables | (36,700) | (335,200) | 478,500 |
Principal collections on lease receivables | 556,000 | 3,646,700 | 9,915,400 |
Income tax receivable/payable | (611,200) | (749,500) | (2,925,900) |
Inventories | 384,500 | (445,400) | (218,600) |
Prepaid expenses | (81,700) | (301,800) | (13,400) |
Other assets | (41,600) | (11,400) | 17,600 |
Accounts payable | (402,600) | 23,000 | 329,400 |
Accrued and other liabilities | (16,900) | 222,800 | (948,500) |
Rents received in advance and security deposits | (275,200) | (819,200) | (1,046,600) |
Deferred revenue | 705,500 | 109,600 | (199,800) |
Net cash provided by operating activities | 43,994,300 | 43,789,300 | 48,346,200 |
INVESTING ACTIVITIES: | |||
Proceeds from sales of property and equipment | 9,400 | ||
Purchase of property and equipment | (383,900) | (139,100) | (74,700) |
Reacquired franchise rights | (3,540,000) | ||
Purchase of equipment for lease contracts | (208,400) | ||
Net cash used for investing activities | (383,900) | (3,669,700) | (283,100) |
FINANCING ACTIVITIES: | |||
Proceeds from borrowings on line of credit/term loan | 33,700,000 | ||
Payments on line of credit/term loan | (3,700,000) | ||
Proceeds from borrowings on notes payable | 30,000,000 | ||
Payments on notes payable | (4,250,000) | (4,250,000) | (4,250,000) |
Repurchases of common stock | (49,119,800) | (44,217,500) | |
Proceeds from exercises of stock options | 4,009,700 | 4,751,700 | 8,320,000 |
Dividends paid | (43,664,200) | (19,257,900) | (33,162,600) |
Net cash used for financing activities | (43,904,500) | (37,876,000) | (43,310,100) |
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (294,100) | 2,243,600 | 4,753,000 |
Cash, cash equivalents and restricted cash, beginning of period | 13,680,600 | 11,437,000 | 6,684,000 |
Cash, cash equivalents and restricted cash, end of period | $ 13,386,500 | $ 13,680,600 | $ 11,437,000 |
CONSOLIDATED CONDENSED STATEM_4
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - Supplemental Disclosures - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
SUPPLEMENTAL DISCLOSURES: | |||
Cash paid for interest | $ 3,049,400 | $ 2,722,500 | $ 1,388,900 |
Cash paid for income taxes | 10,874,300 | 11,308,800 | 11,555,100 |
Reconciliation of cash, cash equivalents and restricted cash: | |||
Cash and cash equivalents | 13,361,500 | 13,615,600 | 11,407,000 |
Restricted cash | 25,000 | 65,000 | 30,000 |
Total cash, cash equivalents and restricted cash | $ 13,386,500 | $ 13,680,600 | $ 11,437,000 |
Organization and Business_
Organization and Business: | 12 Months Ended |
Dec. 30, 2023 | |
Organization and Business: | |
Organization and Business: | 1. Organization and Business: Winmark Corporation and subsidiaries (the Company) offers licenses to operate franchises using the service marks Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. In addition, the Company sells point-of-sale system hardware to its franchisees and certain merchandise to its Play It Again Sports franchisees. The Company also operates a middle-market equipment leasing businesses under the Winmark Capital® mark. The Company has a 52/53-week fiscal year that ends on the last Saturday in December. Fiscal year 2022 was a |
Significant Accounting Policies
Significant Accounting Policies: | 12 Months Ended |
Dec. 30, 2023 | |
Significant Accounting Policies: | |
Significant Accounting Policies: | 2. Significant Accounting Policies: Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Winmark Capital Corporation, Wirth Business Credit, Inc. and Grow Biz Games, Inc. All material inter-company transactions have been eliminated in consolidation. Cash Equivalents Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased. Cash equivalents are stated at cost, which approximates fair value. As of December 30, 2023 and December 31, 2022, the Company had , respectively, of cash located in Canadian banks. The Company holds its cash and cash equivalents with financial institutions and at times, such balances may be in excess of insurance limits. Receivables The Company provides an allowance for credit losses on trade receivables. The allowance for credit losses was at December 30, 2023 and December 31, 2022 respectively. If receivables in excess of the provided allowance are determined uncollectible, they are charged to expense in the year the determination is made. Trade receivables are written off when they become uncollectible (which generally occurs when the franchise terminates and there is no reasonable expectation of collection), and payments subsequently received on such receivable are credited to the allowance for credit losses. Historically, receivables balances written off have not exceeded allowances provided. Restricted Cash The Company is required by certain states to maintain initial franchise fees in a restricted bank account until the franchise opens. Cash held in escrow totaled Investment in Leasing Operations The Company uses the direct finance method of accounting to record income from direct financing leases. At the inception of a lease, the Company records the minimum future lease payments receivable, the estimated residual value of the leased equipment and the unearned lease income. Initial direct costs related to lease originations are deferred as part of the investment and amortized over the lease term. Unearned lease income is the amount by which the total lease receivable plus the estimated residual value exceeds the cost of the equipment. Leasing Income Recognition Leasing income for direct financing leases is recognized under the effective interest method. The effective interest method of income recognition applies a constant rate of interest equal to the internal rate of return on the lease. For sales-type leases in which the equipment has a fair value greater or less than its carrying amount, selling profit/loss is recognized at commencement. For subsequent periods or for leases in which the equipment’s fair value is equal to its carrying amount, the recording of income is consistent with the accounting for a direct financing lease. For leases that are accounted for as operating leases, income is recognized on a straight-line basis when payments under the lease contract are due. Generally, when a lease is more than 90 days delinquent (when more than three monthly payments are owed), the lease is classified as being on non-accrual and the Company stops recognizing leasing income on that date. Payments received on leases in non-accrual status generally reduce the lease receivable. Leases on non-accrual status remain classified as such until there is sustained payment performance that, in the Company’s judgment, would indicate that all contractual amounts will be collected in full. Leasing Expense Leasing expense includes the cost of financing equipment purchases, the cost of equipment sales as well as depreciation expense for operating lease assets. Lease Residual Values Residual values reflect the estimated amounts to be received at lease termination from sales or other dispositions of leased equipment to unrelated parties. The leased equipment residual values are based on the Company’s best estimate. Allowance for Credit Losses The Company maintains an allowance for credit losses at an amount that it believes to be sufficient to absorb losses inherent in its existing lease portfolio as of the reporting dates. Leases are collectively evaluated for potential loss. The Company’s methodology for determining the allowance for credit losses includes consideration of the level of delinquencies and non-accrual leases, historical net charge-off amounts and review of any significant concentrations. A provision is charged against earnings to maintain the allowance for credit losses at the appropriate level. If the actual results are different from the Company’s estimates, results could be different. The Company’s policy is to charge-off against the allowance the estimated unrecoverable portion of accounts once they reach 121 days delinquent. Inventories The Company values its inventories at the lower of cost, as determined by the weighted average cost method, and net realizable values. Inventory consists of computer hardware and related accessories, all of which is finished goods merchandise held for resale. Impairment of Long-lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount of the asset exceeds expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. Property and Equipment Property and equipment is stated at cost. Depreciation and amortization for financial reporting purposes is provided on the straight-line method. Estimated useful lives used in calculating depreciation and amortization are: three to five years for computer and peripheral equipment, five to seven years for furniture and equipment and the shorter of the lease term or useful life for leasehold improvements. Major repairs, refurbishments and improvements which significantly extend the useful lives of the related assets are capitalized. Maintenance and repairs, supplies and accessories are charged to expense as incurred. Intangible Assets Intangible assets are amortized over the estimated useful life on a straight line basis. The Company reviews its intangible assets for impairment at its fiscal year end or whenever events or changes in circumstances indicate that there has been impairment in the value of its intangible assets. impairment was noted during fiscal years ended 2023 and 2022. Intangible assets of Goodwill The Company reviews its goodwill for impairment at its fiscal year end or whenever events or changes in circumstances indicate that there has been impairment in the value of its goodwill. impairment was noted during fiscal years ended 2023, 2022 and 2021. Goodwill of Use of Estimates The preparation of financial statements in conformity with generally accepted U.S. accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The ultimate results could differ from those estimates. Advertising Advertising costs are charged to selling, general and administrative expenses as incurred. Advertising costs were Accounting for Stock-Based Compensation The Company recognizes the cost of all share-based payments to employees, including grants of employee stock options, in the consolidated financial statements based on the grant date fair value of those awards. This cost is recognized over the period for which an employee is required to provide service in exchange for the award. The Company estimates the fair value of options granted using the Black-Scholes option valuation model. The Company estimates the volatility of its common stock at the date of grant based on its historical volatility rate. The Company’s decision to use historical volatility was based upon the lack of actively traded options on its common stock. The Company estimates the expected term based upon historical option exercises. The risk-free interest rate assumption is based on observed interest rates for the expected term. The Company uses historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. For options granted, the Company amortizes the fair value on a straight-line basis. All options are amortized over the vesting periods, which are generally four years beginning from the date of grant. Revenue Recognition – Franchising The following is a description of the principal sources of revenue for the company’s franchising segment. The Company’s performance obligations under franchise agreements consist of (a) a franchise license, including a license to use one of our brands, (b) a point-of-sale software license, (c) initial services, such as pre-opening training and marketing support, and (d) ongoing services, such as marketing services and operational support. These performance obligations are highly interrelated so we do not consider them to be individually distinct and therefore account for them under ASC 606 as a single performance obligation, which is satisfied by providing a right to use our intellectual property over the estimated life of the franchise. The disaggregation of the Company’s franchise revenue is presented within the Revenue lines of the Consolidated Statements of Operations with the amounts included in Revenue: Other delineated below. Royalties The Company collects royalties from each retail franchise based upon a percentage of retail sales. The Company recognizes royalties at the time the underlying sales occur. Merchandise Sales Merchandise sales include the sale of point-of-sale technology equipment to franchisees and the sale of a limited amount of sporting goods to certain Play It Again Sports franchisees. Merchandise sales, which includes shipping and handling charges, are recognized at a point in time when the product has been shipped to the franchisee. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and included in cost of merchandise sold. Franchise Fees The Company collects initial franchise fees when franchise agreements are signed. The Company recognizes franchise fee revenue over the estimated life of the franchise, beginning with the opening of the franchise, which is when the Company has performed substantially all initial services required by the franchise agreement and the franchisee benefits from the rights afforded by the franchise agreement. The Company had deferred franchise fee revenue of Marketing Fees Marketing fee revenue is included in the Revenue: Other line of the Consolidated Statements of Operations. The Company bills and collects annual marketing fees from its franchisees at various times throughout the year. The Company recognizes marketing fee revenue on a straight line basis over the franchise duration. The Company recognized Software License Fees Software license fee revenue is included in the Revenue: Other line of the Consolidated Statements of Operations. The Company bills and collects software license fees from its franchisees when the point-of-sale system is provided to the franchisee. The Company recognizes software license fee revenue on a straight line basis over the franchise duration. The Company recognized Contract Liabilities The Company’s contract liabilities for its franchise revenues consist of deferred revenue associated with franchise fees and software license fees described above. Commission Fees The Company capitalizes incremental commission fees paid as a result of obtaining franchise agreement contracts. Capitalized commission fees of $0.6 million and $0.5 million are outstanding at December 30, 2023 and December 31, 2022, respectively and are included in Prepaid expenses and Other assets in the Consolidated Balance Sheets. Capitalized commission fees are amortized over the life of the franchise and are included in selling, general and administrative expenses. During the fiscal years ended December 30, 2023, December 31, 2022 and December 25, 2021, the Company recognized $109,700, $100,800 and $95,200 of commission fee expense, respectively. Income Taxes The Company accounts for incomes taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense. Sales Tax The Company’s accounting policy is to present taxes collected from customers and remitted to government authorities on a net basis. Earnings Per Share The Company calculates earnings per share by dividing net income by the weighted average number of shares of common stock outstanding to arrive at the Earnings Per Share — Basic. The Company calculates Earnings Per Share — Diluted by dividing net income by the weighted average number of shares of common stock and dilutive stock equivalents from the potential exercise of stock options using the treasury stock method. The following table sets forth the presentation of shares outstanding used in the calculation of basic and diluted earnings per share (“EPS”): Year Ended December 30, 2023 December 31, 2022 December 25, 2021 Denominator for basic EPS — weighted average common shares 3,479,936 3,487,732 3,671,980 Dilutive shares associated with option plans 160,588 104,724 138,500 Denominator for diluted EPS — weighted average common shares and dilutive potential common shares 3,640,524 3,592,456 3,810,480 Options excluded from EPS calculation — anti-dilutive 2,913 21,153 20,294 Fair Value Measurements The Company defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses three levels of inputs to measure fair value: ● Level 1 — quoted prices in active markets for identical assets and liabilities. ● Level 2 — observable inputs other than quoted prices in active markets for identical assets and liabilities. ● Level 3 — unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions. Due to their nature, the carrying value of cash equivalents, receivables, payables and debt obligations approximates fair value. Recently Issued Accounting Pronouncements Segment Reporting Improvements to Income Tax Disclosures Reclassifications Certain reclassifications of previously reported amounts have been made to conform to the current year presentation. Such reclassifications did not impact net income or shareholders’ equity (deficit) as previously reported. |
Investment in Leasing Operation
Investment in Leasing Operations: | 12 Months Ended |
Dec. 30, 2023 | |
Investment in Leasing Operations: | |
Investment in Leasing Operations: | 3. Investment in Leasing Operations: In May 2021, the Company made the decision to no longer solicit new leasing customers in its middle-market leasing business and will pursue an orderly run-off of this leasing portfolio. Investment in leasing operations consists of the following: December 30, 2023 December 31, 2022 Direct financing and sales-type leases: Minimum lease payments receivable $ 77,100 $ 294,100 Estimated unguaranteed residual value of equipment 17,700 461,700 Unearned lease income, net of initial direct costs deferred (6,700) (103,800) Security deposits (28,100) (303,300) Total investment in direct financing and sales-type leases 60,000 348,700 Allowance for credit losses (1,500) (7,100) Net investment in direct financing and sales-type leases 58,500 341,600 Operating leases: Operating lease assets 876,500 716,100 Less accumulated depreciation and amortization (859,900) (707,400) Net investment in operating leases 16,600 8,700 Total net investment in leasing operations $ 75,100 $ 350,300 As of December 30, 2023, the $75,100 total net investment in leases consisted of $75,100 classified as current and $0 classified as long-term. As of December 31, 2022, the $350,300 total net investment in leases consisted of $344,900 classified as current and $5,400 classified as long-term. As of December 30, 2023 and December 31, 2022, no customers had leased assets totaling more than 10% of the Company’s total assets. Future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred, is as follows as of December 30, 2023: Direct Financing and Sales-Type Leases Minimum Lease Income Fiscal Year Payments Receivable Amortization 2024 $ 77,100 $ 6,700 Thereafter — — $ 77,100 $ 6,700 The Company’s key credit quality indicator for its investment in direct financing and sales-type leases is the status of the lease, defined as accruing or non-accrual. Leases that are accruing income are considered to have a lower risk of loss. Non-accrual leases are those that the Company believes have a higher risk of loss. The Company experienced leases in the Company’s lease portfolio were past due, and all were on accrual status. The Company leases high-technology and other business-essential equipment to its leasing customers. Upon expiration of the initial term or extended lease term, depending on the structure of the lease, the customer may return the equipment, renew the lease for an additional term, or purchase the equipment. Due to the uncertainty of such outcome at the end of the lease term, the lease as recorded at commencement represents only the current terms of the agreement. As a lessor, the Company’s leases do not contain non-lease components. The residual values reflect the estimated amounts to be received at lease termination from sales or other dispositions of leased equipment to unrelated parties. The leased equipment residual values are based on the Company’s best estimate. The Company’s risk management strategy for its residual value includes the contractual obligations of its customers to maintain, service, and insure the leased equipment, the use of third party remarketers as well as the analytical review of historical asset dispositions . Leasing income as presented on the Consolidated Statements of Operations consists of the following: Year Ended Year Ended Year Ended December 30, 2023 December 31, 2022 December 25, 2021 Interest income on direct financing and sales-type leases $ 246,200 $ 760,500 - $ 1,755,200 Selling profit (loss) at commencement of sales-type leases 94,900 1,326,900 1,829,800 Operating lease income 2,999,400 2,243,300 2,017,300 Income on sales of equipment under lease 834,500 1,798,000 4,799,400 Other 591,200 809,000 746,600 Leasing income $ 4,766,200 $ 6,937,700 $ 11,148,300 |
Receivables_
Receivables: | 12 Months Ended |
Dec. 30, 2023 | |
Receivables: | |
Receivables: | 4. Receivables: The Company’s current receivables consisted of the following: December 30, 2023 December 31, 2022 Trade $ 189,600 $ 145,000 Royalty 1,110,500 1,216,600 Other 175,200 77,000 $ 1,475,300 $ 1,438,600 As part of its normal operating procedures, the Company requires Standby Letters of Credit as collateral for a portion of its trade receivables. |
Intangible Assets_
Intangible Assets: | 12 Months Ended |
Dec. 30, 2023 | |
Intangible Assets | |
Intangible Assets | 5. Intangible Assets: In June 2022, Winmark terminated an agreement that contained the rights for eleven Play It Again Sports stores to operate separately from Winmark’s franchise system. In terminating the agreement, which included $3.54 million of consideration paid by Winmark, Winmark reacquired the franchise rights to these eleven stores. Upon termination of the agreement, individual franchise agreements were signed for these eleven stores, each with an initial term of ten years . Intangible assets consist of these reacquired franchise rights. The Company amortizes the fair value of the reacquired franchise rights over the contract term of the franchise. The Company recognized Intangible assets consist of the following: December 30, 2023 December 31, 2022 Reacquired franchise rights $ 3,540,000 $ 3,540,000 Accumulated amortization (545,700) (191,700) $ 2,994,300 $ 3,348,300 The following table illustrates future amortization to be expensed for the next five fiscal years and fiscal years thereafter related to reacquired franchise rights as of December 30, 2023. Amortization expected to be expensed in Amount 2024 $ 354,000 2025 354,000 2026 354,000 2027 354,000 2028 354,000 Thereafter 1,224,300 $ 2,994,300 |
Shareholders' Equity (Deficit)_
Shareholders' Equity (Deficit): | 12 Months Ended |
Dec. 30, 2023 | |
Shareholders' Equity (Deficit): | |
Shareholders' Equity (Deficit): | 6. Shareholders’ Equity (Deficit): Dividends In 2023, the Company declared and paid quarterly cash dividends totaling $3.10 per share ($10.8 million) and a $9.40 per share special cash dividend (the “2023 Special Dividend”). The 2023 Special Dividend totaled $32.9 million and was paid by cash on hand. In 2022, the Company declared and paid quarterly cash dividends totaling $2.55 per share ($8.9 million) and a $3.00 per share special cash dividend (the “2022 Special Dividend”). The 2022 Special Dividend totaled $10.4 million and was paid by cash on hand. In 2021, the Company declared and paid quarterly cash dividends totaling $1.60 per share ($5.9 million) and a $7.50 per share special cash dividend (the “2021 Special Dividend”). The 2021 Special Dividend totaled $27.3 million and was paid by cash on hand. Repurchase of Common Stock In 2022, the Company purchased 226,165 shares of our common stock for an aggregate purchase price of $49.1 million. In 2021, the Company purchased 225,839 shares of our common stock for an aggregate purchase price of $44.2 million. Under the Board of Directors’ authorization, as of December 30, 2023 the Company has the ability to repurchase an additional 78,600 shares of its common stock. Repurchases may be made from time to time at prevailing prices, subject to certain restrictions on volume, pricing and timing. Stock Option Plans and Stock-Based Compensation The Company had authorized up to 700,000 shares of common stock for granting either nonqualified or incentive stock options to officers and key employees under the Company’s 2010 Stock Option Plan (the “2010 Plan”). The 2010 Plan expired on February 24, 2020. The Company had also sponsored a Stock Option Plan for Nonemployee Directors (the “Nonemployee Directors Plan”), which had reserved a total of 350,000 shares for issuance to directors of the Company who are not employees. At the April 29, 2020 Annual Shareholders Meeting, the Company’s shareholders approved a new stock option plan, the 2020 Stock Option Plan (the “2020 Plan”). The 2020 Plan (as described more completely in the Company’s definitive Proxy Statement filed with the United States Securities and Exchange Commission on March 10, 2020) provides for the issuance of up to shares) in the form of either nonqualified or incentive stock option grants. Participants in the 2020 Plan may include employees, officers, directors, consultants and advisors of the Company. Grants under the 2020 Plan are (as they were under the 2010 Plan and Nonemployee Directors Plan) made by the Compensation Committee of the Board of Directors at a price of not less than 100% of the fair market value on the date of grant. If an incentive stock option is granted to an individual who owns more than 10% of the voting rights of the Company’s common stock, the option exercise price may not be less than 110% of the fair market value on the date of grant. The term of the options may not exceed 10 years , except in the case of nonqualified stock options, whereby the terms are established by the Compensation Committee. Options may be exercisable in whole or in installments, as determined by the Compensation Committee. Stock option activity under the 2010 Plan, 2020 Plan and Nonemployee Directors Plan (collectively, the “Option Plans”) as of December 30, 2023 was as follows: Weighted Average Remaining Number of Weighted Average Contractual Life Shares Exercise Price (years) Intrinsic Value Outstanding, December 26, 2020 393,488 $ 113.19 5.61 $ 27,864,900 Granted 72,600 226.96 Exercised (105,617) 78.78 Forfeited (4,850) 158.48 Outstanding, December 25, 2021 355,621 146.03 6.32 39,320,600 Granted 62,540 217.03 Exercised (50,032) 94.97 Forfeited (6,501) 183.28 Outstanding, December 31, 2022 361,628 164.70 6.40 26,688,200 Granted 21,320 328.68 Exercised (37,304) 107.49 Forfeited (3,752) 204.26 Outstanding, December 30, 2023 341,892 $ 180.73 5.98 $ 81,017,600 Exercisable, December 30, 2023 230,739 $ 153.64 4.87 $ 60,894,300 The fair value of options granted under the Option Plans during 2023, 2022 and 2021 were estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions and results: Year Ended December 30, 2023 December 31, 2022 December 25, 2021 Risk free interest rate 3.88 % 3.15 % 1.13 % Expected life (years) 6 6 6 Expected volatility 28.10 % 27.58 % 25.51 % Dividend yield 2.94 % 4.29 % 3.13 % Option fair value $ 79.88 $ 40.59 $ 37.90 The total intrinsic value of options exercised during 2023, 2022 and 2021 was $9.2 million, $6.6 million and $16.2 million, respectively. The total fair value of shares vested during 2023, 2022 and 2021 was All unexercised options at December 30, 2023 have an exercise price equal to the fair market value on the date of the grant. Compensation expense of $1,952,400 , $1,652,400 and $1,435,500 relating to the vested portion of the fair value of stock options granted was expensed to “Selling, General and Administrative Expenses” in 2023, 2022 and 2021, respectively. As of December 30, 2023, the Company had $4.2 million of total unrecognized compensation expense related to stock options that is expected to be recognized over the remaining weighted average vesting period of approximately 2.3 years. |
Debt_
Debt: | 12 Months Ended |
Dec. 30, 2023 | |
Debt: | |
Debt: | 7. Debt: Line of Credit/Term Loan During 2021, the Company’s Line of Credit with CIBC Bank USA (the “Line of Credit”) was amended to, among other things: ● Permit the Company to issue up to $30.0 million in additional term notes to one or more affiliates or managed accounts of PGIM, Inc. (formerly Prudential Investment Management, Inc.) (collectively, “Prudential”); ● Remove the tangible net worth covenant minimum requirement, amend the fixed charge coverage ratio definition, and amend the restricted payments covenant to allow the Company more flexibility with respect to shareholder distributions and/or common stock repurchases as long as certain conditions are met (as defined within the amendment); ● Amend the provisions that allow for the replacement of LIBOR as an interest rate option in connection with borrowings under the Line of Credit. During 2022, the Line of Credit was amended to, among other things: ● Provide for a new $30.0 million delayed draw term facility, with available draws summarized as follows: o The Company may draw up to five (5) loans over a period of 18 months , each draw having a principal amount not less than $3.0 million (or higher integral multiples of $1.0 million), with aggregate draws outstanding not to exceed $30.0 million; o The final maturity of all drawn loans of April 12, 2029, with all payments of principal due on such date; o Interest at a rate to be determined at the time of each draw, payable monthly in arrears on the outstanding aggregate principal balance. ● Decrease the aggregate commitments for revolving loans from $25.0 million to $20.0 million; ● Extend the termination date for revolving loans from August 31, 2024 to April 12, 2027; ● Remove the borrowing base covenant restriction for revolving loans; ● Replace LIBOR with SOFR as an interest rate option in connection with borrowings on revolving loans and adjust the definition of and reduce the applicable margin to reflect such replacement; ● Amend the fixed charge coverage ratio definition to exclude principal payments on non-amortizing term loans that are refinanced with proceeds from permitted debt (as defined within the amendment); ● Permit the Company to issue additional term notes under a new Private Shelf Agreement with Prudential as described below. As of December 30, 2023, there were no revolving loans outstanding under the Line of Credit, leaving $20.0 million available for additional revolving borrowings. During the year ended December 30, 2023, the Company had delayed draw term loan borrowings totaling The Line of Credit has been and will continue to be used for general corporate purposes. The Line of Credit is secured by a lien against substantially all of the Company’s assets, contains customary financial conditions and covenants, and requires maintenance of minimum levels of debt service coverage and maximum levels of leverage (all as defined within the Line of Credit). As of December 30, 2023, the Company was in compliance with all of its financial covenants. The Line of Credit allows the Company to choose between two interest rate options in connection with its borrowings. The interest rate options are the Base Rate (as defined) and the SOFR Rate (as defined) plus an applicable margin of 0% and 1.75% , respectively. Interest periods for SOFR borrowings can be one month. The Line of Credit also provides for non-utilization fees of 0.25% per annum on the daily average of the unused commitment. Notes Payable The Company has a Note Agreement (the “Note Agreement”) with Prudential. During 2021, the Note Agreement was amended to, among other things: ● Provide for the issuance of $30.0 million in new senior secured notes; ● Remove the tangible net worth covenant minimum requirement, amend the fixed charge coverage ratio definition, and amend the restricted payments covenant to allow the Company more flexibility with respect to shareholder distributions and/or common stock repurchase as long as certain conditions are met (as defined within the amendment). During 2022, the Note Agreement with Prudential was amended to, among other things: ● Permit the Company to incur the obligations described in and conform to the changes made by the Company’s entry into the amendments to the Line of Credit described above; ● Permit the Company to incur the obligations described in and conform to the changes made by the Company’s entry into the Shelf Agreement described below. As of December 30, 2023, the Company had aggregate principal outstanding of $39.2 million under the Note Agreement; consisting of $4.5 million in principal outstanding from the $25.0 million Series A notes issued in May 2015, $4.7 million in principal outstanding from the $12.5 million Series B notes issued in August 2017 and $30.0 million in principal outstanding from the $30.0 million Series C notes issued in September 2021. The final maturity of the Series A and Series B notes is 10 years from the issuance date. The final maturity of the Series C notes is 7 years from the issuance date. For the Series A notes, interest at a rate of 5.50% per annum on the outstanding principal balance is payable quarterly, along with required prepayments of the principal of $500,000 quarterly for the first five years, and $750,000 quarterly thereafter until the principal is paid in full. For the Series B notes, interest at a rate of 5.10% per annum on the outstanding principal balance is payable quarterly, along with required prepayments of the principal of $312,500 quarterly until the principal is paid in full. For the Series C notes, interest at a rate of 3.18% per annum on the outstanding principal balance is payable quarterly until the principal is paid in full. The Series A, Series B and Series C notes may be prepaid, at the option of the Company, in whole or in part (in a minimum amount of $1.0 million), but prepayments require payment of a Yield Maintenance Amount, as defined in the Note Agreement. The Company’s obligations under the Note Agreement are secured by a lien against substantially all of the Company’s assets (as the notes rank pari passu with the Line of Credit), and the Note Agreement contains customary financial conditions and covenants, and requires maintenance of minimum levels of fixed charge coverage and maximum levels of leverage (all as defined within the Note Agreement). As of December 30, 2023, the Company was in compliance with all of its financial covenants. In connection with the Note Agreement, the Company incurred debt issuance costs, of which unamortized amounts are presented as a direct deduction from the carrying amount of the related liability. In April 2022, the Company entered into a Private Shelf Agreement (the “Shelf Agreement”) with Prudential, summarized as follows: ● For a period three years from entry into the Shelf Agreement, subject to certain customary conditions, the Company may offer and Prudential may purchase from the Company privately negotiated senior notes (“Shelf Notes”) in the aggregate principal amount up to (i) $100.0 million, less (ii) the aggregate principal amount of notes outstanding at such point (including notes outstanding under the existing Prudential Note Agreement); ● Each Shelf Note issued will have an average life and maturity of no more than 12.5 years from the date of original issuance, with interest payable at a rate per annum determined at the time of each issuance; ● The Shelf Notes will be secured by all of the Company’s assets and the Shelf Notes will rank pari passu with the Company’s obligations to the lenders under the amended Line of Credit and the amended Note Agreement; ● The Shelf Notes may be prepaid, at the option of the Company, in whole or in part (in a minimum amount of $1 million), but prepayments require payment of a Yield Maintenance Amount (as defined within the Shelf Agreement); ● The Shelf Agreement contains customary affirmative covenants and negative covenants that are substantially the same as those contained in the amended Line of Credit and amended Note Agreement. As of December 30, 2023, the Company had not issued any notes under the Shelf Agreement and was in compliance with all of its financial covenants. As of December 30, 2023, required payments of the notes payable and term loans for each of the next five years and thereafter are as follows: Notes Payable Term Loans 2024 $ 4,250,000 $ — 2025 2,750,000 — 2026 1,250,000 — 2027 937,500 — 2028 30,000,000 — Thereafter — 30,000,000 Total $ 39,187,500 $ 30,000,000 |
Accrued Liabilities_
Accrued Liabilities: | 12 Months Ended |
Dec. 30, 2023 | |
Accrued Liabilities | |
Accrued Liabilities: | 8. Accrued Liabilities: Accrued liabilities at December 30, 2023 and December 31, 2022 are as follows: December 30, 2023 December 31, 2022 Accrued compensation and benefits $ 587,700 $ 755,100 Rent related liabilities 590,200 542,100 Accrued interest 244,200 282,300 Accrued purchases of goods and services 637,000 129,400 Other 799,100 902,800 $ 2,858,200 $ 2,611,700 |
Contract Liabilities_
Contract Liabilities: | 12 Months Ended |
Dec. 30, 2023 | |
Contract Liabilities: | |
Contract Liabilities: | 9. Contract Liabilities: The Company’s contract liabilities for its franchise revenues consist of deferred revenue associated with franchise fees and software license fees. The table below presents the activity of the current and noncurrent deferred franchise revenue during fiscal years 2023 and 2022, respectively: December 30, 2023 December 31, 2022 Balance at beginning of period $ 8,618,100 $ 8,508,500 Franchise and software license fees collected from franchisees, excluding amount earned as revenue during the period 2,470,600 1,951,800 Fees earned that were included in the balance at the beginning of the period (1,765,100) (1,842,200) Balance at end of period $ 9,323,600 $ 8,618,100 The following table illustrates future estimated revenue to be recognized for the next five fiscal years and fiscal years thereafter related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 30, 2023: Contract Liabilities expected to be recognized in Amount 2024 $ 1,666,100 2025 1,449,800 2026 1,245,300 2027 1,070,700 2028 901,200 Thereafter 2,990,500 $ 9,323,600 We have applied the optional exemption, as provided for under ASC Topic 606, Revenue from Contracts with Customers |
Operating Leases_
Operating Leases: | 12 Months Ended |
Dec. 30, 2023 | |
Operating Leases: | |
Operating Leases: | 10. Operating Leases As of December 30, 2023, the Company leases its Minnesota corporate headquarters in a facility with an operating lease that expires in December 2029. Our lease includes both lease (fixed payments including rent) and non-lease components (common area or other maintenance costs and taxes) which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases. The lease provides us the option to extend the lease for two additional five year periods. The lease renewal option is at our sole discretion; therefore, the renewals to extend the lease term are not included in our right of use asset and lease liabilities as they are not reasonably certain of exercise. The weighted average remaining lease term for this lease is 6.0 years and the discount rate is 5.5% . As our lease does not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company recognized $1,171,700 , $1,207,200 and $1,178,400 of rent expense for the periods ended December 30, 2023, December 31, 2022 and December 25, 2021, respectively. Maturities of operating lease liabilities is as follows as of December 30, 2023: Operating Lease Liabilities expected to be recognized in Amount 2024 $ 784,400 2025 806,000 2026 828,200 2027 851,100 2028 874,600 Thereafter 898,700 Total lease payments 5,043,000 Less imputed interest (755,900) Present value of lease liabilities $ 4,287,100 Of the $4.3 million operating lease liability outstanding at December 30, 2023, $0.6 million is included in Accrued liabilities in the Current liabilities section of the Consolidated Balance Sheets. For leases that contain predetermined fixed escalations of the minimum rent, we recognize the related rent expense on a straight-line basis from the date we take possession of the property to the end of the initial lease term. We record any difference between the straight-line rent amounts and amounts payable under the leases as an adjustment to the amortization of the operating lease right of use asset and operating lease liabilities. Cash or lease incentives received upon entering into certain leases (“tenant allowances”) are recognized on a straight-line basis as a reduction to rent from the date we take possession of the property through the end of the initial lease term. In 2019, we recorded a $2.1 million tenant allowance for non-cash landlord leasehold improvements received as a reduction to the operating lease right of use asset. The reduction in rent also causes a reduction in the amortization of the operating lease right of use asset through the end of the initial lease term. The Company’s policy for leases with a term of twelve months or less is to exclude these short-term leases from our right of use asset and lease liabilities. Supplemental cash flow information related to our operating leases is as follows for the periods ended December 30, 2023 and December 31, 2022: Year Ended December 30, 2023 December 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow outflow from operating leases $ 763,300 $ 742,900 |
Income Taxes_
Income Taxes: | 12 Months Ended |
Dec. 30, 2023 | |
Income Taxes: | |
Income Taxes: | 11. Income Taxes: A reconciliation of the expected federal income tax expense based on the federal statutory tax rate to the actual income tax expense is provided below: Year Ended December 30, 2023 December 31, 2022 December 25, 2021 Federal income tax expense at statutory rate (21%, 21%, 21%) $ 10,785,900 $ 10,664,500 $ 10,472,100 Change in valuation allowance (551,600) (6,600) (1,914,400) State and local income taxes, net of federal benefit 1,513,100 1,515,900 1,546,400 Permanent differences, including stock option expenses (1,372,300) (955,900) (2,332,600) Expiration of attributes 528,600 — 2,057,000 Adjustment to uncertain tax positions 240,100 185,300 163,400 Other, net 39,400 (44,600) (44,500) Actual income tax expense $ 11,183,200 $ 11,358,600 $ 9,947,400 Components of the provision for income taxes are as follows: Year Ended December 30, 2023 December 31, 2022 December 25, 2021 Current: Federal $ 9,237,600 $ 8,892,200 $ 8,782,000 State 1,883,900 2,167,900 2,193,900 Foreign 573,800 586,200 333,500 Current provision 11,695,300 11,646,300 11,309,400 Deferred: Federal (504,700) (351,500) (1,435,000) State (7,400) 63,800 73,000 Deferred provision (512,100) (287,700) (1,362,000) Total provision for income taxes $ 11,183,200 $ 11,358,600 $ 9,947,400 The tax effects of temporary differences that give rise to the net deferred income tax assets and liabilities are presented below: December 30, 2023 December 31, 2022 Deferred tax assets: Accounts receivable and lease reserves $ 500 $ 1,900 Non-qualified stock option expense 1,769,200 1,540,100 Deferred revenue 1,612,200 1,584,600 Trademarks 36,900 34,700 Lease deposits 6,700 72,700 Impairment of note investments — 529,500 Lease revenue and initial direct costs 29,200 63,400 Foreign tax credits 631,100 372,100 Valuation allowance (350,000) (901,600) Depreciation and amortization 25,500 — Other 291,100 271,600 Total deferred tax assets 4,052,400 3,569,000 Deferred tax liabilities: Depreciation and amortization — (28,600) Total deferred tax liabilities — (28,600) Total net deferred tax assets $ 4,052,400 $ 3,540,400 The Company has assessed its taxable earnings history and prospective future taxable income. Based upon this assessment, the Company has determined that it is more likely than not that its deferred tax assets will be realized in future periods and no valuation allowance is necessary, except for the deferred tax assets related to the impairment of note investments (which is a capital loss for tax purposes) and the foreign tax credits. The foreign tax credits will expire after 10 years. As a result, valuation allowances of The amount of unrecognized tax benefits, including interest and penalties, as of December 30, 2023 and December 31, 2022, was $1,345,000 and $1,050,300 , respectively, primarily for potential state taxes. All of these unrecognized tax benefits, if recognized, would impact the effective tax rate. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense for all periods presented. The Company had accrued approximately The following table summarizes the activity related to the Company’s unrecognized tax benefits: Total Balance at December 25, 2021 $ 677,200 Increases related to current year tax positions 266,800 Expiration of the statute of limitations for the assessment of taxes (72,700) Balance at December 31, 2022 871,300 Increases related to current year tax positions 277,600 Subtractions for tax positions of prior years (65,800) Balance at December 30, 2023 $ 1,083,100 The Company and its subsidiaries file income tax returns in the U.S. federal, numerous state and certain foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2019. We expect various statutes of limitation to expire during the next 12 months. Due to the uncertain response of taxing authorities, a range of outcomes cannot be reasonably estimated at this time. |
Commitments and Contingencies_
Commitments and Contingencies: | 12 Months Ended |
Dec. 30, 2023 | |
Commitments and Contingencies: | |
Commitments and Contingencies: | 12. Commitments and Contingencies: Employee Benefit Plan The Company provides a 401(k) Savings Incentive Plan which covers substantially all employees. The plan provides for matching contributions and optional profit-sharing contributions at the discretion of the Board of Directors. Employee contributions are fully vested; matching and profit sharing contributions are subject to a five-year service vesting schedule. Company contributions to the plan for 2023, 2022 and 2021 were $371,200 , $397,700 and $348,200 , respectively. Litigation From time to time, the Company is exposed to asserted and unasserted legal claims encountered in the normal course of business. Management believes that the ultimate resolution of these matters will not have a material adverse effect on the consolidated financial position or results of operations of the Company. |
Segment Reporting_
Segment Reporting: | 12 Months Ended |
Dec. 30, 2023 | |
Segment Reporting: | |
Segment Reporting: | 13. Segment Reporting: For 2023, the Company’s leasing business did not reach any of the quantitative thresholds for a reportable segment, and the Company does not expect the results from its leasing business to be of significance in the future periods. The revenues and operating income from the Company’s leasing business are included in Other in its reportable segment disclosures. Disclosures for 2022 and 2021 have been recast to be consistent with the 2023 presentation. The Company currently has one reportable business segment, franchising, and one non-reportable operating segment. The franchising segment franchises value-oriented retail store concepts that buy, sell and trade merchandise. The non-reportable operating segment includes the Company’s equipment leasing business. Segment reporting is intended to give financial statement users a better view of how the Company manages and evaluates its businesses. The Company’s internal management reporting is the basis for the information disclosed for its operating segments. The following tables summarize financial information by segment and provide a reconciliation of segment contribution to operating income: Year ended December 30, 2023 December 31, 2022 December 25, 2021 Revenue: Franchising $ 78,477,300 $ 74,473,100 $ 67,067,900 Other 4,766,200 6,937,700 11,148,300 Total revenue $ 83,243,500 $ 81,410,800 $ 78,216,200 Reconciliation to operating income: Franchising segment contribution $ 49,375,900 $ 49,007,900 $ 44,832,100 Other operating segment contribution 3,904,700 4,604,900 6,504,100 Total operating income $ 53,280,600 $ 53,612,800 $ 51,336,200 Depreciation and amortization: Franchising $ 646,900 $ 463,100 $ 243,900 Other 125,800 140,000 186,700 Total depreciation and amortization $ 772,700 $ 603,100 $ 430,600 As of December 30, 2023 December 31, 2022 Identifiable assets: Franchising $ 7,570,000 $ 8,901,000 Other 281,200 784,300 Unallocated 21,116,500 20,770,400 Total $ 28,967,700 $ 30,455,700 Revenues are all generated from United States operations other than franchising revenues from Canadian operations of $6.8 million, $6.4 million and $4.9 million in each of fiscal 2023, 2022 and 2021, respectively. All long-lived assets are located within the United States. |
Significant Accounting Polici_2
Significant Accounting Policies: (Policies) | 12 Months Ended |
Dec. 30, 2023 | |
Significant Accounting Policies: | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Winmark Capital Corporation, Wirth Business Credit, Inc. and Grow Biz Games, Inc. All material inter-company transactions have been eliminated in consolidation. |
Cash Equivalents | Cash Equivalents Cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased. Cash equivalents are stated at cost, which approximates fair value. As of December 30, 2023 and December 31, 2022, the Company had , respectively, of cash located in Canadian banks. The Company holds its cash and cash equivalents with financial institutions and at times, such balances may be in excess of insurance limits. |
Receivables | Receivables The Company provides an allowance for credit losses on trade receivables. The allowance for credit losses was at December 30, 2023 and December 31, 2022 respectively. If receivables in excess of the provided allowance are determined uncollectible, they are charged to expense in the year the determination is made. Trade receivables are written off when they become uncollectible (which generally occurs when the franchise terminates and there is no reasonable expectation of collection), and payments subsequently received on such receivable are credited to the allowance for credit losses. Historically, receivables balances written off have not exceeded allowances provided. |
Restricted Cash | Restricted Cash The Company is required by certain states to maintain initial franchise fees in a restricted bank account until the franchise opens. Cash held in escrow totaled |
Investment in Leasing Operations | Investment in Leasing Operations The Company uses the direct finance method of accounting to record income from direct financing leases. At the inception of a lease, the Company records the minimum future lease payments receivable, the estimated residual value of the leased equipment and the unearned lease income. Initial direct costs related to lease originations are deferred as part of the investment and amortized over the lease term. Unearned lease income is the amount by which the total lease receivable plus the estimated residual value exceeds the cost of the equipment. Leasing Income Recognition Leasing income for direct financing leases is recognized under the effective interest method. The effective interest method of income recognition applies a constant rate of interest equal to the internal rate of return on the lease. For sales-type leases in which the equipment has a fair value greater or less than its carrying amount, selling profit/loss is recognized at commencement. For subsequent periods or for leases in which the equipment’s fair value is equal to its carrying amount, the recording of income is consistent with the accounting for a direct financing lease. For leases that are accounted for as operating leases, income is recognized on a straight-line basis when payments under the lease contract are due. Generally, when a lease is more than 90 days delinquent (when more than three monthly payments are owed), the lease is classified as being on non-accrual and the Company stops recognizing leasing income on that date. Payments received on leases in non-accrual status generally reduce the lease receivable. Leases on non-accrual status remain classified as such until there is sustained payment performance that, in the Company’s judgment, would indicate that all contractual amounts will be collected in full. Leasing Expense Leasing expense includes the cost of financing equipment purchases, the cost of equipment sales as well as depreciation expense for operating lease assets. Lease Residual Values Residual values reflect the estimated amounts to be received at lease termination from sales or other dispositions of leased equipment to unrelated parties. The leased equipment residual values are based on the Company’s best estimate. Allowance for Credit Losses The Company maintains an allowance for credit losses at an amount that it believes to be sufficient to absorb losses inherent in its existing lease portfolio as of the reporting dates. Leases are collectively evaluated for potential loss. The Company’s methodology for determining the allowance for credit losses includes consideration of the level of delinquencies and non-accrual leases, historical net charge-off amounts and review of any significant concentrations. A provision is charged against earnings to maintain the allowance for credit losses at the appropriate level. If the actual results are different from the Company’s estimates, results could be different. The Company’s policy is to charge-off against the allowance the estimated unrecoverable portion of accounts once they reach 121 days delinquent. |
Inventories | Inventories The Company values its inventories at the lower of cost, as determined by the weighted average cost method, and net realizable values. Inventory consists of computer hardware and related accessories, all of which is finished goods merchandise held for resale. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount of the asset exceeds expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost. Depreciation and amortization for financial reporting purposes is provided on the straight-line method. Estimated useful lives used in calculating depreciation and amortization are: three to five years for computer and peripheral equipment, five to seven years for furniture and equipment and the shorter of the lease term or useful life for leasehold improvements. Major repairs, refurbishments and improvements which significantly extend the useful lives of the related assets are capitalized. Maintenance and repairs, supplies and accessories are charged to expense as incurred. |
Intangible Assets | Intangible Assets Intangible assets are amortized over the estimated useful life on a straight line basis. The Company reviews its intangible assets for impairment at its fiscal year end or whenever events or changes in circumstances indicate that there has been impairment in the value of its intangible assets. impairment was noted during fiscal years ended 2023 and 2022. Intangible assets of |
Goodwill | Goodwill The Company reviews its goodwill for impairment at its fiscal year end or whenever events or changes in circumstances indicate that there has been impairment in the value of its goodwill. impairment was noted during fiscal years ended 2023, 2022 and 2021. Goodwill of |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted U.S. accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The ultimate results could differ from those estimates. |
Advertising | Advertising Advertising costs are charged to selling, general and administrative expenses as incurred. Advertising costs were |
Accounting for Stock-Based Compensation | Accounting for Stock-Based Compensation The Company recognizes the cost of all share-based payments to employees, including grants of employee stock options, in the consolidated financial statements based on the grant date fair value of those awards. This cost is recognized over the period for which an employee is required to provide service in exchange for the award. The Company estimates the fair value of options granted using the Black-Scholes option valuation model. The Company estimates the volatility of its common stock at the date of grant based on its historical volatility rate. The Company’s decision to use historical volatility was based upon the lack of actively traded options on its common stock. The Company estimates the expected term based upon historical option exercises. The risk-free interest rate assumption is based on observed interest rates for the expected term. The Company uses historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. For options granted, the Company amortizes the fair value on a straight-line basis. All options are amortized over the vesting periods, which are generally four years beginning from the date of grant. |
Revenue Recognition - Franchising | Revenue Recognition – Franchising The following is a description of the principal sources of revenue for the company’s franchising segment. The Company’s performance obligations under franchise agreements consist of (a) a franchise license, including a license to use one of our brands, (b) a point-of-sale software license, (c) initial services, such as pre-opening training and marketing support, and (d) ongoing services, such as marketing services and operational support. These performance obligations are highly interrelated so we do not consider them to be individually distinct and therefore account for them under ASC 606 as a single performance obligation, which is satisfied by providing a right to use our intellectual property over the estimated life of the franchise. The disaggregation of the Company’s franchise revenue is presented within the Revenue lines of the Consolidated Statements of Operations with the amounts included in Revenue: Other delineated below. Royalties The Company collects royalties from each retail franchise based upon a percentage of retail sales. The Company recognizes royalties at the time the underlying sales occur. Merchandise Sales Merchandise sales include the sale of point-of-sale technology equipment to franchisees and the sale of a limited amount of sporting goods to certain Play It Again Sports franchisees. Merchandise sales, which includes shipping and handling charges, are recognized at a point in time when the product has been shipped to the franchisee. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and included in cost of merchandise sold. Franchise Fees The Company collects initial franchise fees when franchise agreements are signed. The Company recognizes franchise fee revenue over the estimated life of the franchise, beginning with the opening of the franchise, which is when the Company has performed substantially all initial services required by the franchise agreement and the franchisee benefits from the rights afforded by the franchise agreement. The Company had deferred franchise fee revenue of Marketing Fees Marketing fee revenue is included in the Revenue: Other line of the Consolidated Statements of Operations. The Company bills and collects annual marketing fees from its franchisees at various times throughout the year. The Company recognizes marketing fee revenue on a straight line basis over the franchise duration. The Company recognized Software License Fees Software license fee revenue is included in the Revenue: Other line of the Consolidated Statements of Operations. The Company bills and collects software license fees from its franchisees when the point-of-sale system is provided to the franchisee. The Company recognizes software license fee revenue on a straight line basis over the franchise duration. The Company recognized Contract Liabilities The Company’s contract liabilities for its franchise revenues consist of deferred revenue associated with franchise fees and software license fees described above. Commission Fees The Company capitalizes incremental commission fees paid as a result of obtaining franchise agreement contracts. Capitalized commission fees of $0.6 million and $0.5 million are outstanding at December 30, 2023 and December 31, 2022, respectively and are included in Prepaid expenses and Other assets in the Consolidated Balance Sheets. Capitalized commission fees are amortized over the life of the franchise and are included in selling, general and administrative expenses. During the fiscal years ended December 30, 2023, December 31, 2022 and December 25, 2021, the Company recognized $109,700, $100,800 and $95,200 of commission fee expense, respectively. |
Income Taxes | Income Taxes The Company accounts for incomes taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense. |
Sales Tax | Sales Tax The Company’s accounting policy is to present taxes collected from customers and remitted to government authorities on a net basis. |
Earnings Per Share | Earnings Per Share The Company calculates earnings per share by dividing net income by the weighted average number of shares of common stock outstanding to arrive at the Earnings Per Share — Basic. The Company calculates Earnings Per Share — Diluted by dividing net income by the weighted average number of shares of common stock and dilutive stock equivalents from the potential exercise of stock options using the treasury stock method. The following table sets forth the presentation of shares outstanding used in the calculation of basic and diluted earnings per share (“EPS”): Year Ended December 30, 2023 December 31, 2022 December 25, 2021 Denominator for basic EPS — weighted average common shares 3,479,936 3,487,732 3,671,980 Dilutive shares associated with option plans 160,588 104,724 138,500 Denominator for diluted EPS — weighted average common shares and dilutive potential common shares 3,640,524 3,592,456 3,810,480 Options excluded from EPS calculation — anti-dilutive 2,913 21,153 20,294 |
Fair Value Measurements | Fair Value Measurements The Company defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses three levels of inputs to measure fair value: ● Level 1 — quoted prices in active markets for identical assets and liabilities. ● Level 2 — observable inputs other than quoted prices in active markets for identical assets and liabilities. ● Level 3 — unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions. Due to their nature, the carrying value of cash equivalents, receivables, payables and debt obligations approximates fair value. |
Recent Accounting Pronouncements: | Recently Issued Accounting Pronouncements Segment Reporting Improvements to Income Tax Disclosures |
Reclassifications | Reclassifications Certain reclassifications of previously reported amounts have been made to conform to the current year presentation. Such reclassifications did not impact net income or shareholders’ equity (deficit) as previously reported. |
Significant Accounting Polici_3
Significant Accounting Policies: (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
Significant Accounting Policies: | |
Schedule of shares outstanding used in the calculation of basic and diluted earnings per share | Year Ended December 30, 2023 December 31, 2022 December 25, 2021 Denominator for basic EPS — weighted average common shares 3,479,936 3,487,732 3,671,980 Dilutive shares associated with option plans 160,588 104,724 138,500 Denominator for diluted EPS — weighted average common shares and dilutive potential common shares 3,640,524 3,592,456 3,810,480 Options excluded from EPS calculation — anti-dilutive 2,913 21,153 20,294 |
Investment in Leasing Operati_2
Investment in Leasing Operations: (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
Investment in Leasing Operations: | |
Schedule of investment in leasing operations | December 30, 2023 December 31, 2022 Direct financing and sales-type leases: Minimum lease payments receivable $ 77,100 $ 294,100 Estimated unguaranteed residual value of equipment 17,700 461,700 Unearned lease income, net of initial direct costs deferred (6,700) (103,800) Security deposits (28,100) (303,300) Total investment in direct financing and sales-type leases 60,000 348,700 Allowance for credit losses (1,500) (7,100) Net investment in direct financing and sales-type leases 58,500 341,600 Operating leases: Operating lease assets 876,500 716,100 Less accumulated depreciation and amortization (859,900) (707,400) Net investment in operating leases 16,600 8,700 Total net investment in leasing operations $ 75,100 $ 350,300 |
Schedule of future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred | Future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred, is as follows as of December 30, 2023: Direct Financing and Sales-Type Leases Minimum Lease Income Fiscal Year Payments Receivable Amortization 2024 $ 77,100 $ 6,700 Thereafter — — $ 77,100 $ 6,700 |
Schedule of components of leasing income | Year Ended Year Ended Year Ended December 30, 2023 December 31, 2022 December 25, 2021 Interest income on direct financing and sales-type leases $ 246,200 $ 760,500 - $ 1,755,200 Selling profit (loss) at commencement of sales-type leases 94,900 1,326,900 1,829,800 Operating lease income 2,999,400 2,243,300 2,017,300 Income on sales of equipment under lease 834,500 1,798,000 4,799,400 Other 591,200 809,000 746,600 Leasing income $ 4,766,200 $ 6,937,700 $ 11,148,300 |
Receivables_ (Tables)
Receivables: (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
Receivables: | |
Schedule of the Company's current receivables | December 30, 2023 December 31, 2022 Trade $ 189,600 $ 145,000 Royalty 1,110,500 1,216,600 Other 175,200 77,000 $ 1,475,300 $ 1,438,600 |
Intangible Assets_ (Tables)
Intangible Assets: (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
Intangible Assets | |
Schedule of amortized intangible assets | December 30, 2023 December 31, 2022 Reacquired franchise rights $ 3,540,000 $ 3,540,000 Accumulated amortization (545,700) (191,700) $ 2,994,300 $ 3,348,300 |
Schedule of future amortization to be expensed | Amortization expected to be expensed in Amount 2024 $ 354,000 2025 354,000 2026 354,000 2027 354,000 2028 354,000 Thereafter 1,224,300 $ 2,994,300 |
Shareholders' Equity (Deficit_2
Shareholders' Equity (Deficit): (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
Shareholders' Equity (Deficit): | |
Schedule of stock option activity | Weighted Average Remaining Number of Weighted Average Contractual Life Shares Exercise Price (years) Intrinsic Value Outstanding, December 26, 2020 393,488 $ 113.19 5.61 $ 27,864,900 Granted 72,600 226.96 Exercised (105,617) 78.78 Forfeited (4,850) 158.48 Outstanding, December 25, 2021 355,621 146.03 6.32 39,320,600 Granted 62,540 217.03 Exercised (50,032) 94.97 Forfeited (6,501) 183.28 Outstanding, December 31, 2022 361,628 164.70 6.40 26,688,200 Granted 21,320 328.68 Exercised (37,304) 107.49 Forfeited (3,752) 204.26 Outstanding, December 30, 2023 341,892 $ 180.73 5.98 $ 81,017,600 Exercisable, December 30, 2023 230,739 $ 153.64 4.87 $ 60,894,300 |
Schedule of weighted average assumptions used in estimation of fair value of options granted | Year Ended December 30, 2023 December 31, 2022 December 25, 2021 Risk free interest rate 3.88 % 3.15 % 1.13 % Expected life (years) 6 6 6 Expected volatility 28.10 % 27.58 % 25.51 % Dividend yield 2.94 % 4.29 % 3.13 % Option fair value $ 79.88 $ 40.59 $ 37.90 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
Debt: | |
Schedule of required prepayments of the notes payable for each of the next five years and thereafter | Notes Payable Term Loans 2024 $ 4,250,000 $ — 2025 2,750,000 — 2026 1,250,000 — 2027 937,500 — 2028 30,000,000 — Thereafter — 30,000,000 Total $ 39,187,500 $ 30,000,000 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
Accrued Liabilities | |
Schedule of accrued liabilities | December 30, 2023 December 31, 2022 Accrued compensation and benefits $ 587,700 $ 755,100 Rent related liabilities 590,200 542,100 Accrued interest 244,200 282,300 Accrued purchases of goods and services 637,000 129,400 Other 799,100 902,800 $ 2,858,200 $ 2,611,700 |
Contract Liabilities_ (Tables)
Contract Liabilities: (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
Contract Liabilities: | |
Schedule of activity of current and noncurrent deferred franchise revenue | December 30, 2023 December 31, 2022 Balance at beginning of period $ 8,618,100 $ 8,508,500 Franchise and software license fees collected from franchisees, excluding amount earned as revenue during the period 2,470,600 1,951,800 Fees earned that were included in the balance at the beginning of the period (1,765,100) (1,842,200) Balance at end of period $ 9,323,600 $ 8,618,100 |
Schedule of future estimated revenue to be recognized related to performance obligations | Contract Liabilities expected to be recognized in Amount 2024 $ 1,666,100 2025 1,449,800 2026 1,245,300 2027 1,070,700 2028 901,200 Thereafter 2,990,500 $ 9,323,600 |
Operating Leases_ (Tables)
Operating Leases: (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
Operating Leases: | |
Schedule of maturities of operating lease liabilities | Operating Lease Liabilities expected to be recognized in Amount 2024 $ 784,400 2025 806,000 2026 828,200 2027 851,100 2028 874,600 Thereafter 898,700 Total lease payments 5,043,000 Less imputed interest (755,900) Present value of lease liabilities $ 4,287,100 |
Schedule of supplemental cash flow information related to operating leases | Year Ended December 30, 2023 December 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow outflow from operating leases $ 763,300 $ 742,900 |
Income Taxes_ (Tables)
Income Taxes: (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
Income Taxes: | |
Schedule of reconciliation of the expected federal income tax expense based on the federal statutory tax rate to the actual income tax expense | Year Ended December 30, 2023 December 31, 2022 December 25, 2021 Federal income tax expense at statutory rate (21%, 21%, 21%) $ 10,785,900 $ 10,664,500 $ 10,472,100 Change in valuation allowance (551,600) (6,600) (1,914,400) State and local income taxes, net of federal benefit 1,513,100 1,515,900 1,546,400 Permanent differences, including stock option expenses (1,372,300) (955,900) (2,332,600) Expiration of attributes 528,600 — 2,057,000 Adjustment to uncertain tax positions 240,100 185,300 163,400 Other, net 39,400 (44,600) (44,500) Actual income tax expense $ 11,183,200 $ 11,358,600 $ 9,947,400 |
Schedule of components of the provision for income taxes | Year Ended December 30, 2023 December 31, 2022 December 25, 2021 Current: Federal $ 9,237,600 $ 8,892,200 $ 8,782,000 State 1,883,900 2,167,900 2,193,900 Foreign 573,800 586,200 333,500 Current provision 11,695,300 11,646,300 11,309,400 Deferred: Federal (504,700) (351,500) (1,435,000) State (7,400) 63,800 73,000 Deferred provision (512,100) (287,700) (1,362,000) Total provision for income taxes $ 11,183,200 $ 11,358,600 $ 9,947,400 |
Schedule of tax effects of temporary differences that give rise to the net deferred income tax assets and liabilities | December 30, 2023 December 31, 2022 Deferred tax assets: Accounts receivable and lease reserves $ 500 $ 1,900 Non-qualified stock option expense 1,769,200 1,540,100 Deferred revenue 1,612,200 1,584,600 Trademarks 36,900 34,700 Lease deposits 6,700 72,700 Impairment of note investments — 529,500 Lease revenue and initial direct costs 29,200 63,400 Foreign tax credits 631,100 372,100 Valuation allowance (350,000) (901,600) Depreciation and amortization 25,500 — Other 291,100 271,600 Total deferred tax assets 4,052,400 3,569,000 Deferred tax liabilities: Depreciation and amortization — (28,600) Total deferred tax liabilities — (28,600) Total net deferred tax assets $ 4,052,400 $ 3,540,400 |
Summary of activity related to the Company's unrecognized tax benefits | Total Balance at December 25, 2021 $ 677,200 Increases related to current year tax positions 266,800 Expiration of the statute of limitations for the assessment of taxes (72,700) Balance at December 31, 2022 871,300 Increases related to current year tax positions 277,600 Subtractions for tax positions of prior years (65,800) Balance at December 30, 2023 $ 1,083,100 |
Segment Reporting_ (Tables)
Segment Reporting: (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
Segment Reporting: | |
Schedule of financial information by segment and reconciliation of segment contribution to operating income | Year ended December 30, 2023 December 31, 2022 December 25, 2021 Revenue: Franchising $ 78,477,300 $ 74,473,100 $ 67,067,900 Other 4,766,200 6,937,700 11,148,300 Total revenue $ 83,243,500 $ 81,410,800 $ 78,216,200 Reconciliation to operating income: Franchising segment contribution $ 49,375,900 $ 49,007,900 $ 44,832,100 Other operating segment contribution 3,904,700 4,604,900 6,504,100 Total operating income $ 53,280,600 $ 53,612,800 $ 51,336,200 Depreciation and amortization: Franchising $ 646,900 $ 463,100 $ 243,900 Other 125,800 140,000 186,700 Total depreciation and amortization $ 772,700 $ 603,100 $ 430,600 As of December 30, 2023 December 31, 2022 Identifiable assets: Franchising $ 7,570,000 $ 8,901,000 Other 281,200 784,300 Unallocated 21,116,500 20,770,400 Total $ 28,967,700 $ 30,455,700 |
Organization and Business_ (Det
Organization and Business: (Details) - item | 12 Months Ended | |
Dec. 30, 2023 | Dec. 25, 2021 | |
Organization and Business: | ||
Number of weeks in a fiscal year | 53 | 52 |
Significant Accounting Polici_4
Significant Accounting Policies: Balance Sheet Disclosures (Details) - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Receivables | |||
Allowance for Doubtful Accounts Receivable, Current | $ 600 | $ 800 | |
Restricted Cash | |||
Restricted cash held in escrow | $ 25,000 | 65,000 | $ 30,000 |
Allowance for Credit Losses | |||
Delinquent period for charging-off against allowance for credit losses | 121 days | ||
Canadian operations | |||
Cash Equivalents | |||
Cash located in banks | $ 143,600 | $ 9,900 |
Significant Accounting Polici_5
Significant Accounting Policies: PPE, Intangible Assets, Goodwill, Advertising, Stock-Based Comp (Details) - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Intangible Assets | |||
Impairment expense | $ 0 | $ 0 | |
Intangible assets | 2,994,300 | 3,348,300 | |
Goodwill | |||
Goodwill impairment | 0 | 0 | $ 0 |
Goodwill | 607,500 | 607,500 | |
Advertising | |||
Advertising costs | $ 700,000 | $ 500,000 | $ 300,000 |
Accounting for Stock-Based Compensation | |||
Stock options, vesting period | 4 years | ||
Computer and peripheral equipment | Minimum | |||
Property, plant and equipment | |||
Estimated useful lives | 3 years | ||
Computer and peripheral equipment | Maximum | |||
Property, plant and equipment | |||
Estimated useful lives | 5 years | ||
Furniture and equipment | Minimum | |||
Property, plant and equipment | |||
Estimated useful lives | 5 years | ||
Furniture and equipment | Maximum | |||
Property, plant and equipment | |||
Estimated useful lives | 7 years |
Significant Accounting Polici_6
Significant Accounting Policies: Marketing Fees and Software License Fees (Details) - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Revenue recognition | |||
Deferred revenue | $ 9,323,600 | $ 8,618,100 | $ 8,508,500 |
Franchise fees | |||
Revenue recognition | |||
Deferred revenue | 7,100,000 | 6,700,000 | |
Revenue | 1,512,000 | 1,575,400 | 1,496,900 |
Marketing Fees | |||
Revenue recognition | |||
Revenue | 1,600,000 | 1,500,000 | 1,300,000 |
Software License Fees | |||
Revenue recognition | |||
Deferred revenue | 1,800,000 | 1,600,000 | |
Revenue | $ 400,000 | $ 300,000 | $ 300,000 |
Significant Accounting Polici_7
Significant Accounting Policies: Commission Fees (Details) - Commission Fees - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Commission Fees | |||
Capitalized contract costs | $ 600,000 | $ 500,000 | |
Expense | $ 109,700 | $ 100,800 | $ 95,200 |
Significant Accounting Polici_8
Significant Accounting Policies: Earnings Per Share (Details) - shares | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Earnings Per Share | |||
Denominator for basic EPS - weighted average common shares | 3,479,936 | 3,487,732 | 3,671,980 |
Dilutive shares associated with option plans | 160,588 | 104,724 | 138,500 |
Denominator for diluted EPS - weighted average common shares and dilutive potential common shares | 3,640,524 | 3,592,456 | 3,810,480 |
Options excluded from EPS calculation - anti-dilutive (in shares) | 2,913 | 21,153 | 20,294 |
Investment in Leasing Operati_3
Investment in Leasing Operations: Summary of Leasing Operations (Details) - USD ($) | Dec. 30, 2023 | Dec. 31, 2022 |
Direct financing and sales-type leases: | ||
Minimum lease payments receivable | $ 77,100 | $ 294,100 |
Estimated unguaranteed residual value of equipment | 17,700 | 461,700 |
Unearned lease income net of initial direct costs deferred | (6,700) | (103,800) |
Security deposits | (28,100) | (303,300) |
Total investment in direct financing and sales-type leases | 60,000 | 348,700 |
Allowance for credit losses | (1,500) | (7,100) |
Net investment in direct financing and sales-type leases | 58,500 | 341,600 |
Operating leases: | ||
Operating lease assets | 876,500 | 716,100 |
Less accumulated depreciation and amortization | (859,900) | (707,400) |
Net investment in operating leases | 16,600 | 8,700 |
Total net investment in leasing operations | 75,100 | 350,300 |
Net investment in leases - current | 75,100 | 344,900 |
Net investment in leases - long-term | $ 0 | $ 5,400 |
Investment in Leasing Operati_4
Investment in Leasing Operations: Risk Concentration (Details) - customer | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Total assets | ||
Investment in leasing operations | ||
Number of customers | 0 | 0 |
Investment in Leasing Operati_5
Investment in Leasing Operations: Minimum Lease Payments Receivable (Details) - USD ($) | Dec. 30, 2023 | Dec. 31, 2022 |
Direct Financing and Sales-Type Leases, Minimum Lease Payments Receivable | ||
2024 | $ 77,100 | |
Total | 77,100 | $ 294,100 |
Direct Financing and Sales-Type Leases, Income Amortization | ||
2024 | 6,700 | |
Total | $ 6,700 |
Investment in Leasing Operati_6
Investment in Leasing Operations: Other (Details) - USD ($) | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Allowance for Credit Losses for Leasing Operations | ||
Credit losses | $ 0 | $ 0 |
Investment in direct financing and sales-type leases | 60,000 | 348,700 |
Financial Asset, Past Due | ||
Allowance for Credit Losses for Leasing Operations | ||
Investment in direct financing and sales-type leases | $ 0 | $ 0 |
Investment in Leasing Operati_7
Investment in Leasing Operations: Leasing Income (Details) - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Leasing income | |||
Interest income on direct financing and sales-type leases | $ 246,200 | $ 760,500 | $ 1,755,200 |
Selling profit (loss) at commencement of sales-type leases | 94,900 | 1,326,900 | 1,829,800 |
Operating lease income | 2,999,400 | 2,243,300 | 2,017,300 |
Income on sales of equipment under lease | 834,500 | 1,798,000 | 4,799,400 |
Other | 591,200 | 809,000 | 746,600 |
Leasing income | $ 4,766,200 | $ 6,937,700 | $ 11,148,300 |
Receivables_ (Details)
Receivables: (Details) - USD ($) | Dec. 30, 2023 | Dec. 31, 2022 |
Current receivables | ||
Trade | $ 189,600 | $ 145,000 |
Royalty | 1,110,500 | 1,216,600 |
Other | 175,200 | 77,000 |
Total current receivables | $ 1,475,300 | $ 1,438,600 |
Intangible Assets_ Franchise ri
Intangible Assets: Franchise rights (Details) | 1 Months Ended | 12 Months Ended | |
Jun. 30, 2022 USD ($) store | Dec. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Intangible Assets | |||
Termination of agreement, number of stores | 11 | ||
Termination of agreement, consideration paid by Winmark | $ | $ 3,540,000 | ||
Number of stores in which Winmark reacquired the franchise rights | 11 | ||
Number of stores that signed franchise agreements | 11 | ||
Amortization of intangible assets | $ | $ 354,000 | $ 191,700 | |
Franchise Rights | |||
Intangible Assets | |||
Useful life | 10 years |
Intangible Assets_ Net of Amort
Intangible Assets: Net of Amortization (Details) - USD ($) | Dec. 30, 2023 | Dec. 31, 2022 |
Intangible Assets | ||
Reacquired franchise rights | $ 3,540,000 | $ 3,540,000 |
Accumulated amortization | (545,700) | (191,700) |
Total | $ 2,994,300 | $ 3,348,300 |
Intangible Assets_ Amortization
Intangible Assets: Amortization (Details) - USD ($) | Dec. 30, 2023 | Dec. 31, 2022 |
Future amortization to be expensed: | ||
2024 | $ 354,000 | |
2025 | 354,000 | |
2026 | 354,000 | |
2027 | 354,000 | |
2028 | 354,000 | |
Thereafter | 1,224,300 | |
Total | $ 2,994,300 | $ 3,348,300 |
Shareholders' Equity (Deficit_3
Shareholders' Equity (Deficit): Dividends and Repurchase of Common Stock (Details) - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Repurchase of Common Stock | |||
Aggregate purchase price of shares repurchased | $ 49,119,800 | $ 44,217,500 | |
Dividends | |||
Cash dividends declared and paid (in dollars per share) | $ 3.10 | $ 2.55 | $ 1.60 |
Aggregate quarterly cash dividends declared and paid, excluding special dividend | $ 10,800,000 | $ 8,900,000 | $ 5,900,000 |
Special cash dividend approved by Board of Directors (in dollars per share) | $ 9.40 | $ 3 | $ 7.50 |
Total special dividend in cash | $ 32,900,000 | $ 10,400,000 | $ 27,300,000 |
Common Stock Repurchase Program | |||
Repurchase of Common Stock | |||
Number of shares repurchased | 226,165 | 225,839 | |
Aggregate purchase price of shares repurchased | $ 49,100,000 | $ 44,200,000 | |
Number of additional shares that can be repurchased | 78,600 |
Shareholders' Equity (Deficit_4
Shareholders' Equity (Deficit): Stock Options (Details) - shares | 12 Months Ended | ||
Dec. 30, 2023 | Apr. 29, 2020 | Feb. 24, 2020 | |
2020 Plan | |||
Stock Option Plans | |||
Number of shares authorized for issuance | 100,000 | ||
2020 Plan | Employee Stock Option [Member] | Minimum | |||
Stock Option Plans | |||
Exercise price of stock options as a percentage of fair value on the date of grant | 100% | ||
Threshold voting rights above which the option exercise price may not be less than 110% of the fair market value (as a percent) | 10% | ||
Exercise price of stock options as a percentage of fair value on the date of grant for an individual who owns more than 10% of voting rights | 110% | ||
2020 Plan | Employee Stock Option [Member] | Maximum | |||
Stock Option Plans | |||
Term of the option | 10 years | ||
2010 Plan | |||
Stock Option Plans | |||
Number of shares authorized for issuance | 700,000 | ||
Number of shares authorized and unissued under the plan | 125,465 | ||
Nonemployee Directors Plan | |||
Stock Option Plans | |||
Number of shares authorized for issuance | 350,000 | ||
Number of shares authorized and unissued under the plan | 24,500 |
Shareholders' Equity (Deficit_5
Shareholders' Equity (Deficit): Stock Options Activity (Details) - Employee Stock Option [Member] - USD ($) | 12 Months Ended | |||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | Dec. 26, 2020 | |
Number of Shares | ||||
Outstanding at the beginning of the period (in shares) | 361,628 | 355,621 | 393,488 | |
Granted (in shares) | 21,320 | 62,540 | 72,600 | |
Exercised (in shares) | (37,304) | (50,032) | (105,617) | |
Forfeited (in shares) | (3,752) | (6,501) | (4,850) | |
Outstanding at the end of the period (in shares) | 341,892 | 361,628 | 355,621 | 393,488 |
Exercisable at the end of the period (in shares) | 230,739 | |||
Weighted Average Exercise Price | ||||
Outstanding at the beginning of the period (in dollars per share) | $ 164.70 | $ 146.03 | $ 113.19 | |
Granted (in dollars per share) | 328.68 | 217.03 | 226.96 | |
Exercised (in dollars per share) | 107.49 | 94.97 | 78.78 | |
Forfeited (in dollars per share) | 204.26 | 183.28 | 158.48 | |
Outstanding at the end of the period (in dollars per share) | 180.73 | $ 164.70 | $ 146.03 | $ 113.19 |
Exercisable at the end of the period (in dollars per share) | $ 153.64 | |||
Weighted Average Remaining Contractual Life (years) | ||||
Outstanding | 5 years 11 months 23 days | 6 years 4 months 24 days | 6 years 3 months 25 days | 5 years 7 months 9 days |
Exercisable at the end of the period | 4 years 10 months 13 days | |||
Intrinsic Value | ||||
Outstanding at the beginning of the period | $ 26,688,200 | $ 39,320,600 | $ 27,864,900 | |
Outstanding at the end of the period | 81,017,600 | $ 26,688,200 | $ 39,320,600 | $ 27,864,900 |
Exercisable at the end of the period | $ 60,894,300 | |||
Weighted average assumptions and results used in estimation of fair value of options granted | ||||
Risk free interest rate (as a percent) | 3.88% | 3.15% | 1.13% | |
Expected life (years) | 6 years | 6 years | 6 years | |
Expected volatility (as a percent) | 28.10% | 27.58% | 25.51% | |
Dividend yield (as a percent) | 2.94% | 4.29% | 3.13% | |
Option fair value (in dollars per share) | $ 79.88 | $ 40.59 | $ 37.90 |
Shareholders' Equity (Deficit_6
Shareholders' Equity (Deficit): Additional Information (Details) - Employee Stock Option [Member] - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Additional disclosures | |||
Total intrinsic value of options exercised | $ 9,200,000 | $ 6,600,000 | $ 16,200,000 |
Total fair value of shares vested | 11,700,000 | 10,900,000 | 9,000,000 |
Compensation expense | 1,952,400 | $ 1,652,400 | $ 1,435,500 |
Total unrecognized compensation expense | $ 4,200,000 | ||
Weighted average period for recognition of unrecognized compensation expense | 2 years 3 months 18 days |
Debt_ Line of Credit (Details)
Debt: Line of Credit (Details) $ in Millions | 12 Months Ended | |
Dec. 30, 2023 USD ($) loan item | Dec. 31, 2022 USD ($) | |
Delayed Draw Term Facility | ||
Line of Credit | ||
Borrowings outstanding | $ 30 | |
Maximum borrowing capacity | $ 30 | |
Maximum number of loans available over a period of 18 months | loan | 5 | |
Time period over which the Company may draw loans | 18 months | |
Minimum principal amount of each draw | $ 3 | |
Integral multiple | $ 1 | |
Delayed Draw Term Facility | Minimum | ||
Line of Credit | ||
Interest rate (as a percent) | 4.60% | |
Delayed Draw Term Facility | Maximum | ||
Line of Credit | ||
Interest rate (as a percent) | 4.75% | |
Revolving Loans | ||
Line of Credit | ||
Borrowings outstanding | $ 0 | |
Maximum borrowing capacity | 20 | $ 25 |
Maximum amount of additional term notes available for issuance | 30 | |
Line of credit available for additional borrowings | $ 20 | |
Number of interest rate options | item | 2 | |
Non-utilization fees (as a percent) | 0.25% | |
Revolving Loans | Base Rate | ||
Line of Credit | ||
Variable rate basis | Base Rate | |
Applicable margin (as a percent) | 0% | |
Revolving Loans | LIBOR | ||
Line of Credit | ||
Variable rate basis | SOFR | |
Applicable margin (as a percent) | 1.75% | |
Revolving Loans | One month LIBOR | ||
Line of Credit | ||
Variable rate basis | one month LIBOR |
Debt_ Notes Payable (Details)
Debt: Notes Payable (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Apr. 30, 2022 | Dec. 30, 2023 | Sep. 30, 2021 | Aug. 31, 2017 | May 31, 2015 | |
Note Agreement | Notes Payable. | |||||
Notes Payable | |||||
Amount of additional senior secured notes available for issuance | $ 30,000,000 | ||||
Principal amount outstanding | 39,200,000 | ||||
Minimum prepayment | 1,000,000 | ||||
Note Agreement | Series A Notes | |||||
Notes Payable | |||||
Principal amount outstanding | $ 4,500,000 | ||||
Note payable, face amount | $ 25,000,000 | ||||
Debt term | 10 years | ||||
Interest rate (as a percent) | 5.50% | ||||
Quarterly principal payment, first five years | $ 500,000 | ||||
Quarterly principal payment, thereafter | 750,000 | ||||
Note Agreement | Series B Notes | |||||
Notes Payable | |||||
Principal amount outstanding | $ 4,700,000 | ||||
Note payable, face amount | $ 12,500,000 | ||||
Debt term | 10 years | ||||
Interest rate (as a percent) | 5.10% | ||||
Quarterly principal payment | $ 312,500 | ||||
Note Agreement | Series C Notes | |||||
Notes Payable | |||||
Principal amount outstanding | $ 30,000,000 | ||||
Note payable, face amount | $ 30,000,000 | ||||
Debt term | 7 years | ||||
Interest rate (as a percent) | 3.18% | ||||
Shelf Agreement | Senior Notes | |||||
Notes Payable | |||||
Principal amount outstanding | $ 0 | ||||
Shelf Agreement term | 3 years | ||||
Maximum amount of Shelf Notes available for issuance. | $ 100,000,000 | ||||
Minimum prepayment | $ 1,000,000 | ||||
Shelf Agreement | Senior Notes | Maximum | |||||
Notes Payable | |||||
Debt term | 12 years 6 months |
Debt_ Maturities (Details)
Debt: Maturities (Details) | Dec. 30, 2023 USD ($) |
Notes Payable. | |
Required prepayments of the notes payable and term loans for each of the next five years and thereafter | |
2023 | $ 4,250,000 |
2024 | 2,750,000 |
2025 | 1,250,000 |
2026 | 937,500 |
2027 | 30,000,000 |
Total | 39,187,500 |
Delayed Draw Term Facility | |
Required prepayments of the notes payable and term loans for each of the next five years and thereafter | |
Thereafter | 30,000,000 |
Total | $ 30,000,000 |
Accrued Liabilities_ (Details)
Accrued Liabilities: (Details) - USD ($) | Dec. 30, 2023 | Dec. 31, 2022 |
Accrued Liabilities | ||
Accrued compensation and benefits | $ 587,700 | $ 755,100 |
Rent related liabilities | 590,200 | 542,100 |
Accrued interest | 244,200 | 282,300 |
Accrued purchases of goods and services | 637,000 | 129,400 |
Other | 799,100 | 902,800 |
Accrued liabilities | $ 2,858,200 | $ 2,611,700 |
Contract Liabilities_ Activity
Contract Liabilities: Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Activity of the current and noncurrent deferred franchise revenue | ||
Balance at beginning of period | $ 8,618,100 | $ 8,508,500 |
Franchise and software license fees collected from franchisees, excluding amount earned as revenue during the period | 2,470,600 | 1,951,800 |
Fees earned that were included in the balance at the beginning of the period | (1,765,100) | (1,842,200) |
Balance at end of period | $ 9,323,600 | $ 8,618,100 |
Contract Liabilities_ Performan
Contract Liabilities: Performance Obligations (Details) | Dec. 30, 2023 USD ($) |
Future estimated revenue to be recognized related to performance obligations | |
Revenue, remaining performance obligation | $ 9,323,600 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-12-31 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, remaining performance obligation | $ 1,666,100 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-12-29 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, remaining performance obligation | $ 1,449,800 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-12-28 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, remaining performance obligation | $ 1,245,300 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-12-27 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, remaining performance obligation | $ 1,070,700 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-12-26 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | 1 year |
Revenue, remaining performance obligation | $ 901,200 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-12-31 | |
Future estimated revenue to be recognized related to performance obligations | |
Duration of expected recognition period for remaining performance obligation | |
Revenue, remaining performance obligation | $ 2,990,500 |
Operating Leases_ Summary (Deta
Operating Leases: Summary (Details) | 12 Months Ended | ||
Dec. 30, 2023 USD ($) item | Dec. 31, 2022 USD ($) | Dec. 25, 2021 USD ($) | |
Operating Leases | |||
Remaining lease term | 6 years | ||
Discount rate (as a percent) | 5.50% | ||
Rent expense | $ | $ 1,171,700 | $ 1,207,200 | $ 1,178,400 |
Corporate headquarters, Minnesota | |||
Operating Leases | |||
Lease renewal option | true | ||
Number of lease extension periods | item | 2 | ||
Lease renewal term | 5 years |
Operating Leases_ Maturities an
Operating Leases: Maturities and other (Details) - USD ($) | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Maturities of operating lease liabilities: | ||
2024 | $ 784,400 | |
2025 | 806,000 | |
2026 | 828,200 | |
2027 | 851,100 | |
2028 | 874,600 | |
Thereafter | 898,700 | |
Total | 5,043,000 | |
Less imputed interest | (755,900) | |
Present value of lease liabilities | 4,287,100 | |
Operating lease liability | ||
Operating lease liability, current | $ 600,000 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | |
Other disclosures | ||
Tenant allowance recorded during the year as a reduction to the operating lease right of use asset | $ 2,100,000 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flow outflow from operating leases | $ 763,300 | $ 742,900 |
Income Taxes_ Reconciliation, C
Income Taxes: Reconciliation, Components and Deferred Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Income Taxes: | |||
Federal statutory tax rate (as a percent) | 21% | 21% | 21% |
Reconciliation of the expected federal income tax expense based on the federal statutory tax rate to the actual income tax expense | |||
Federal income tax expense at statutory rate (21%, 21%, 21%) | $ 10,785,900 | $ 10,664,500 | $ 10,472,100 |
Change in valuation allowance | (551,600) | (6,600) | (1,914,400) |
State and local income taxes, net of federal benefit | 1,513,100 | 1,515,900 | 1,546,400 |
Permanent differences, including stock option expenses | (1,372,300) | (955,900) | (2,332,600) |
Expiration of attributes | 528,600 | 2,057,000 | |
Adjustment to uncertain tax positions | 240,100 | 185,300 | 163,400 |
Other, net | 39,400 | (44,600) | (44,500) |
Total provision for income taxes | 11,183,200 | 11,358,600 | 9,947,400 |
Current provision for income taxes: | |||
Federal | 9,237,600 | 8,892,200 | 8,782,000 |
State | 1,883,900 | 2,167,900 | 2,193,900 |
Foreign | 573,800 | 586,200 | 333,500 |
Current provision | 11,695,300 | 11,646,300 | 11,309,400 |
Deferred provision for income taxes: | |||
Federal | (504,700) | (351,500) | (1,435,000) |
State | (7,400) | 63,800 | 73,000 |
Deferred provision | (512,100) | (287,700) | (1,362,000) |
Total provision for income taxes | 11,183,200 | 11,358,600 | $ 9,947,400 |
Deferred tax assets: | |||
Accounts receivable and lease reserves | 500 | 1,900 | |
Non-qualified stock option expense | 1,769,200 | 1,540,100 | |
Deferred revenue | 1,612,200 | 1,584,600 | |
Trademarks | 36,900 | 34,700 | |
Lease deposits | 6,700 | 72,700 | |
Impairment of note investments | 529,500 | ||
Lease revenue and initial direct costs | 29,200 | 63,400 | |
Foreign tax credits | 631,100 | 372,100 | |
Valuation allowance | (350,000) | (901,600) | |
Depreciation and amortization | 25,500 | ||
Other | 291,100 | 271,600 | |
Total deferred tax assets | 4,052,400 | 3,569,000 | |
Deferred tax liabilities: | |||
Depreciation and amortization | (28,600) | ||
Total deferred tax liabilities | (28,600) | ||
Total net deferred tax liabilities | $ 4,052,400 | $ 3,540,400 |
Income Taxes_ Other (Details)
Income Taxes: Other (Details) - USD ($) | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Deferred tax assets, valuation allowance | ||
Valuation allowance | $ 350,000 | $ 901,600 |
Unrecognized Tax Benefits | ||
Unrecognized tax benefits, including interest and penalties | 1,345,000 | 1,050,300 |
Interest and penalties accrued related to unrecognized tax benefit | 261,900 | 179,000 |
Activity related to the company's unrecognized tax benefits | ||
Balance at the beginning of the period | 871,300 | 677,200 |
Increases related to current year tax positions | 277,600 | 266,800 |
Subtractions for tax positions of prior years | (65,800) | |
Expiration of the statute of limitations for the assessment of taxes | (72,700) | |
Balance at the end of the period | $ 1,083,100 | $ 871,300 |
Period over which various statutes of limitations are expected to expire | 12 months |
Commitments and Contingencies_
Commitments and Contingencies: (Details) - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Employee Benefit Plan | |||
Service period for vesting of employer contribution | 5 years | ||
Company contributions | $ 371,200 | $ 397,700 | $ 348,200 |
Segment Reporting_ (Details)
Segment Reporting: (Details) | 12 Months Ended | ||
Dec. 30, 2023 USD ($) segment item | Dec. 31, 2022 USD ($) | Dec. 25, 2021 USD ($) | |
Segment Reporting | |||
Number of reportable operating segments | item | 1 | ||
Number of non-reportable operating segments | segment | 1 | ||
Total revenue | $ 83,243,500 | $ 81,410,800 | $ 78,216,200 |
Total operating income | 53,280,600 | 53,612,800 | 51,336,200 |
Total depreciation and amortization | 772,700 | 603,100 | 430,600 |
Total identifiable assets | 28,967,700 | 30,455,700 | |
Franchising | Canadian operations | |||
Segment Reporting | |||
Total revenue | 6,800,000 | 6,400,000 | 4,900,000 |
Operating | Franchising | |||
Segment Reporting | |||
Total revenue | 78,477,300 | 74,473,100 | 67,067,900 |
Total operating income | 49,375,900 | 49,007,900 | 44,832,100 |
Total depreciation and amortization | 646,900 | 463,100 | 243,900 |
Total identifiable assets | 7,570,000 | 8,901,000 | |
Operating | Other. | |||
Segment Reporting | |||
Total revenue | 4,766,200 | 6,937,700 | 11,148,300 |
Total operating income | 3,904,700 | 4,604,900 | 6,504,100 |
Total depreciation and amortization | 125,800 | 140,000 | $ 186,700 |
Total identifiable assets | 281,200 | 784,300 | |
Unallocated | |||
Segment Reporting | |||
Total identifiable assets | $ 21,116,500 | $ 20,770,400 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) | $ 40,178,100 | $ 39,424,900 | $ 39,919,900 |
Insider Trading Arrangements
Insider Trading Arrangements | 12 Months Ended |
Dec. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |