Develop a memo on Presto Hospitality—Scoping Assume that Presto concludes the arrangement is not a lease. Next, in selecting an appropriate framework for evaluating the Presto Hospitality concessions agreement, evaluate whether this arrangement should be considered a Collaborative Arrangement. What are the implications of an arrangement falling within the scope of this guidance? In addition to researching the guidance, stop and think: Does this guidance intuitively make sense for this situation?

It is a case study.

Presto has negotiated a 10-year concessions agreement with a major league baseball stadium owner (Stadium Co.). The agreement would give Presto the right and obligation to operate all of the stadium's fixed concession stands and portable food and beverage carts, to provide food and beverage service to premium seating areas (including suites), and to have hawkers selling concessions in the aisles of the stadium (Sodas! Peanuts!), collectively, the "Food and Beverage Facilities." The locations of fixed concession stands within the stadium are designated in architectural drawings included within the draft concessions agreement. The draft contract states that Stadium Co., at its option and at its cost (such as the cost to rebuild leasehold improvements), can require Presto to move its locations within the stadium. The concessions agreement will require Presto to remit 50% of its gross food sales and 52% of its gross alcohol sales to Stadium Co. in exchange for the right to operate at the stadium. Presto will also be required to make an upfront payment of $5 million to Stadium Co., which will be used toward capital improvements, build-outs, and branding of the con- cession facilities. Throughout the operating period of this agreement, Stadium Co. will have the right to approve all of Presto's proposed menu items, pricing, and choices of suppliers, and Stadium Co. has indicated in negotiations that it plans to actively exercise this approval authority. To be chosen as the concession provider for this stadium, Presto submitted a suc- cessful bid and was selected from a group of competing potential concessionaires.