How does Americas Best Value Inn define fair value?

According to the 2025 Americas Best Value Inn Franchise Disclosure Document, fair value is defined based on accounting standards related to asset and liability valuation. Specifically, fair value is the price that would be received when selling an asset or the amount paid to transfer a liability. This valuation is determined in an orderly transaction between market participants at the measurement date, also known as the exit price.

The valuation of assets and liabilities is categorized into a three-level hierarchy. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the company can access at the measurement date. Level 2 includes quoted prices for similar items in active markets, prices for identical or similar items in inactive markets, observable inputs like interest rates, and market-corroborated data. Level 3 inputs are unobservable and based on assumptions about what market participants would use to price the asset or liability, developed using the best available information, including the company's own data.

For Americas Best Value Inn, cash, accounts receivable, and accounts payable are valued at their carrying amounts on the balance sheets due to their short-term nature. Notes receivable are valued using expected future receipts discounted at risk-adjusted rates, which are considered Level 3 inputs. Understanding these fair value measurements is important for franchisees as it reflects how the franchisor assesses and reports the value of its assets and liabilities, which can impact the overall financial health and stability of the company.