diff --git a/packages/backend/src/managers/applicationManager.spec.ts b/packages/backend/src/managers/applicationManager.spec.ts
new file mode 100644
index 000000000..b999536e0
--- /dev/null
+++ b/packages/backend/src/managers/applicationManager.spec.ts
@@ -0,0 +1,56 @@
+import { expect, test, vi } from 'vitest';
+import { ApplicationManager } from './applicationManager';
+import type { RecipeStatusRegistry } from '../registries/RecipeStatusRegistry';
+import type { ExtensionContext } from '@podman-desktop/api';
+import type { GitManager } from './gitManager';
+import os from 'os';
+import fs, { type Dirent } from 'fs';
+import path from 'path';
+
+test('appUserDirectory should be under home directory', () => {
+  vi.spyOn(os, 'homedir').mockReturnValue('/home/user');
+  const manager = new ApplicationManager({} as GitManager, {} as RecipeStatusRegistry, {} as ExtensionContext);
+  expect(manager.appUserDirectory).toMatch(/^\/home\/user/);
+});
+
+test('getLocalModels should return models in local directory', () => {
+  vi.spyOn(os, 'homedir').mockReturnValue('/home/user');
+  // eslint-disable-next-line @typescript-eslint/no-explicit-any
+  vi.spyOn(fs, 'readdirSync').mockImplementation((dir: string): any => {
+    // TODO(feloy): fix any
+    if (dir.endsWith('model-id-1') || dir.endsWith('model-id-2')) {
+      const base = path.basename(dir);
+      return [base + '-model'];
+    } else {
+      return [
+        {
+          isDirectory: () => true,
+          path: '/home/user/appstudio-dir',
+          name: 'model-id-1',
+        },
+        {
+          isDirectory: () => true,
+          path: '/home/user/appstudio-dir',
+          name: 'model-id-2',
+        },
+        {
+          isDirectory: () => false,
+          path: '/home/user/appstudio-dir',
+          name: 'other-file-should-be-ignored.txt',
+        },
+      ] as Dirent[];
+    }
+  });
+  const manager = new ApplicationManager({} as GitManager, {} as RecipeStatusRegistry, {} as ExtensionContext);
+  const models = manager.getLocalModels();
+  expect(models).toEqual([
+    {
+      id: 'model-id-1',
+      file: 'model-id-1-model',
+    },
+    {
+      id: 'model-id-2',
+      file: 'model-id-2-model',
+    },
+  ]);
+});