You are correct Buns, all the RBD property leases pass through the profit and loss accounts. If the lease financial commitments are forced onto the balance sheet then RBD will appear at lot more indebted than it is now. However from a cashflow perspective nothing will change, so perhaps if this new law goes through, the impact on the likes of RBD will not be a great as you think?
For those of us with long memories RBD has been here before. RBD used to own outright most of their business premises (all the stand alone KFCs anyway). They cashed them up and used to money to embark on what turned out to be a loss making expansion into Pizza Hut Victoria.
At the time the KFCs were sold, we were told that the extra rent that needed to be paid would almost exactly be offset by the savings in depreciation charges. Of course the depreciation rules have since changed. Building owners are no longer able to claim depreciation, but store operators are still able to claim lease costs as a cost of doing business. Does that mean that technically RBD is now underlyingly more profitable, because of the decision to sell those RBD stores all those years ago?
Perhaps all the new proposed law is doing is to even things up again so there is little difference in profit whether you own or lease the stores you conduct your business from?
SNOOPY