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RIGHT OF USE ASSET AND LEASE LIABILITIES
 9 Months Ended
Mar. 31, 2020
Leases [Abstract]  
RIGHT OF USE ASSET AND LEASE LIABILITIES RIGHT OF USE ASSET AND LEASE LIABILITIES
At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company considers it to be, or contain, a lease. The Company leases its company-owned salons and some of its corporate facilities under operating leases. The original terms of the salon leases range from 1 to 20 years with many leases renewable for additional 5 to 10 year terms at the option of the Company. The Company also has variable lease payments that are based on sales levels. For most leases, the Company is required to pay real estate taxes and other occupancy expenses. Total rent expense includes the following:

For the Three Months Ended March 31,For the Nine Months Ended March 31,
2020201920202019
(Dollars in thousands)
Minimum rent$14,970  $26,325  $51,468  85,099  
Percentage rent based on sales2981,3732,145  3,476  
Real estate taxes and other expenses3,975  4,63410,389  14,377  
Total$19,243  $32,332  $64,002  $102,952  
The Company also leases the premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. These leases, generally with terms of approximately 5 years, are expected to be renewed on expiration. All additional lease costs are passed through to the franchisees. Upon adopting Topic 842, the Company now records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Condensed Consolidated Statement of Operations. For the three and nine months ended March 31, 2020, franchise rental income and franchise rent expense were $31.8 and $96.9 million, respectively.

For franchise and company-owned salon operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. The Right of Use (ROU) asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives received, if any. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Generally, the non-lease components such as real estate taxes and other occupancy expenses are separate from rent expense within the lease and are not allocated to the lease liability. Due to the COVID-19 triggering event, the Company assessed its ROU assets for impairment and determined that as of March 31, 2020, the ROU assets were not impaired. As the COVID-19 pandemic continues, the Company will continue to assess its ROU assets for impairment, which could have a material impact on the Company's results of operations.

The discount rate used to determine the present value of the lease payments is the Company's estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the interest rate implicit in the lease cannot generally be determined. The Company uses the portfolio approach in applying the discount rate based on original lease term. The weighted average remaining lease term was 6.86 years and the weighted-average discount rate was 3.95 percent for all salon operating leases as of March 31, 2020.
As of March 31, 2020, future operating lease commitments to be paid and received by the Company were as follows:
Fiscal YearLeases for Franchise SalonsLeases for Company-owned SalonsCorporate LeasesTotal Operating Lease PaymentsSublease Income To Be Received From FranchiseesNet Rent Commitments
Remainder of 2020$31,959  $14,484  $150  $46,593  $(31,959) $14,634  
2021121,831  51,700  1,781  175,312  (121,831) 53,481  
2022111,23942,916  1,410  155,565  (111,239) 44,326  
2023100,687  37,374  1,447  139,508  (100,687) 38,821  
202490,582  33,096  1,484  125,162  (90,582) 34,580  
Thereafter257,841  92,091  9,339  359,271  (257,841) 101,430  
Total future obligations$714,139  $271,661  $15,611  $1,001,411  $(714,139) $287,272  
Less amounts representing interest89,274  32,514  2,896  124,684  
Present value of lease liabilities$624,865  $239,147  $12,715  $876,727  
Less current lease liabilities102,310  46,171  1,001  149,482  
Long-term lease liabilities$522,555  $192,976  $11,714  $727,245  
RIGHT OF USE ASSET AND LEASE LIABILITIES RIGHT OF USE ASSET AND LEASE LIABILITIES
At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company considers it to be, or contain, a lease. The Company leases its company-owned salons and some of its corporate facilities under operating leases. The original terms of the salon leases range from 1 to 20 years with many leases renewable for additional 5 to 10 year terms at the option of the Company. The Company also has variable lease payments that are based on sales levels. For most leases, the Company is required to pay real estate taxes and other occupancy expenses. Total rent expense includes the following:

For the Three Months Ended March 31,For the Nine Months Ended March 31,
2020201920202019
(Dollars in thousands)
Minimum rent$14,970  $26,325  $51,468  85,099  
Percentage rent based on sales2981,3732,145  3,476  
Real estate taxes and other expenses3,975  4,63410,389  14,377  
Total$19,243  $32,332  $64,002  $102,952  
The Company also leases the premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. These leases, generally with terms of approximately 5 years, are expected to be renewed on expiration. All additional lease costs are passed through to the franchisees. Upon adopting Topic 842, the Company now records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Condensed Consolidated Statement of Operations. For the three and nine months ended March 31, 2020, franchise rental income and franchise rent expense were $31.8 and $96.9 million, respectively.

For franchise and company-owned salon operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. The Right of Use (ROU) asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives received, if any. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Generally, the non-lease components such as real estate taxes and other occupancy expenses are separate from rent expense within the lease and are not allocated to the lease liability. Due to the COVID-19 triggering event, the Company assessed its ROU assets for impairment and determined that as of March 31, 2020, the ROU assets were not impaired. As the COVID-19 pandemic continues, the Company will continue to assess its ROU assets for impairment, which could have a material impact on the Company's results of operations.

The discount rate used to determine the present value of the lease payments is the Company's estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the interest rate implicit in the lease cannot generally be determined. The Company uses the portfolio approach in applying the discount rate based on original lease term. The weighted average remaining lease term was 6.86 years and the weighted-average discount rate was 3.95 percent for all salon operating leases as of March 31, 2020.
As of March 31, 2020, future operating lease commitments to be paid and received by the Company were as follows:
Fiscal YearLeases for Franchise SalonsLeases for Company-owned SalonsCorporate LeasesTotal Operating Lease PaymentsSublease Income To Be Received From FranchiseesNet Rent Commitments
Remainder of 2020$31,959  $14,484  $150  $46,593  $(31,959) $14,634  
2021121,831  51,700  1,781  175,312  (121,831) 53,481  
2022111,23942,916  1,410  155,565  (111,239) 44,326  
2023100,687  37,374  1,447  139,508  (100,687) 38,821  
202490,582  33,096  1,484  125,162  (90,582) 34,580  
Thereafter257,841  92,091  9,339  359,271  (257,841) 101,430  
Total future obligations$714,139  $271,661  $15,611  $1,001,411  $(714,139) $287,272  
Less amounts representing interest89,274  32,514  2,896  124,684  
Present value of lease liabilities$624,865  $239,147  $12,715  $876,727  
Less current lease liabilities102,310  46,171  1,001  149,482  
Long-term lease liabilities$522,555  $192,976  $11,714  $727,245