What was the common units balance for Benjamin Franklin Plumbing as of December 31, 2022?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
rds conditioned upon occurrence of these events has not been recognized in the consolidated financial statements as of and for the years ended December 31, 2024, 2023 and 2022.
The awards that have a time-vesting component are earned in equal tranches upon each of the anniversaries over the period of five years which was determined to be the requisite service period. These awards will not vest until the return on invested capital condition is met or upon occurrence of the change in control events even as the time-vesting condition is met. As of December 31, 2024, 2023 and 2022 no units were vested.
The table below summarizes transactions for unit holders of the Company:
| Time-Vesting Units | |||||
|---|---|---|---|---|---|
| Weighted Average Fair Value | Class B Profit Interest Units | Weighted Average Remaining Contractual Term | |||
| Units outstanding as of December 31, 2021 | $ | 0.34 | 5,034,244 | 2.5 years | |
| Granted | - | ||||
| Forfeitures | - | - | |||
| Vested due to change of control | 0.34 | (5,034,244) | |||
| Units outstanding as of November 30, 2022 | - | - | N/A | ||
| Granted under 2022 Plan | - | 17,539,639 | |||
| Forfeitures | - | - | |||
| Vested | - | - | |||
| Units outstanding as of December 31, 2022 | 0.30 | 17,539,639 | 4.92 years | ||
| Granted | 0.31 | 4,019,918 | |||
| Forfeitures | 0.30 | (1,216,642) | |||
| Vested | - | - | |||
| Units outstanding as of December 31, 2023 | 0.30 | 20,342,915 | 4.01 years | ||
| Granted | 0.29 | 3,865,437 | |||
| Forfeitures | 0.30 | (4,526,974) | |||
| Vested | - | - | |||
| Units outstanding as of December 31, 2024 | $ | 0.30 | 19,681,378 | 3.22 years |
| Performance-Vesting Units | |||||
|---|---|---|---|---|---|
| Weighted Average Fair Value | Class B Profit Interest Units | Weighted Average Remaining Contractual Term | |||
| Units outstanding as of December 31, 2021 | $ | 0.18 | 10,068,487 | 2.5 years | |
| Granted | - | - | |||
| Forfeitures | - | - | |||
| Vested due to change of control | 0.18 | (10,068,487) | |||
| Units outstanding as of November 30, 2022 | - | - | N/A | ||
| Granted under 2022 Plan | 0.22 | 48,225,786 | |||
| Forfeitures | - | ||||
| Vested | - | - | |||
| Units outstanding as of December 31, 2022 | 0.22 | 48,225,786 | 4.92 years | ||
| Granted | 0.22 | 11,052,892 | |||
| Forfeitures | 0.22 | (3,345,194) | |||
| Vested | - | - | |||
| Units outstanding as of December 31, 2023 | 0.22 | 55,933,484 | 4.01 years | ||
| Granted | 0.27 | 10,628,139 | |||
| Forfeitures | 0.22 | (13,397,269) | |||
| Vested | - | - | |||
| Units outstanding as of December 31, 2024 | $ | 0.22 | 53,164,354 | 3.22 years |
The fair value of each option award is estimated on the date of the grant using the Black-Scholes options pricing model with the following assumptions for the years ended December 31, 2024, 2023 and 2022:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Dividend yield | 0% | 0% | 0% |
| Risk-free interest rate | 4.4% | 3.8% | 3.8% |
| Expected life of options | 4 years | 5 years | 5 years |
| Volatility | 45% | 47.5% | 47.5% |
Expected volatilities are based on the average volatilities of comparable companies over the expected term. The risk-free interest rate is based on the average of the five-year treasury rate on the grant date of the options.
For the years ended December 31, 2024, 2023 and 2022 compensation expense related to time vesting Class B profit interest units of $1,848, $3,817, and $310, respectively, was recognized in stock-based compensation expense under the 2022 Plan on the consolidated statements of operations. $1,113, $2,453, and $190 was allocated by specific allocation (unit holder) for the years ended December 31, 2024, 2023 and 2022, respectively, and $735, $1,364, and $120 was allocated based on revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
As of December 31, 2024, 2023 and 2022, the Company had $3,915, $5,461 and $4,941 of unrecognized stock-based compensation expense related to unvested time vesting stock-based compensation arrangements. As of December 31, 2024, 2023 and 2022, the Company had $21,602, $20,112, and $17,153 of unrecognized stock-based compensation expense related to unvested performance vesting stock-based compensation arrangements.
AB Assetco LLC and Subsidiaries
Notes to Consolidated Financial Statements (in thousands of dollars)
Years Ended December 31, 2024, 2023 and 2022
Class A-2 Units Issued to Certain Executives
From time to time the Partnership provides certain executives with ownership interests in the Partnership (known as Class A-2 Units) in exchange for promissory notes and rollover equity, in accordance with the Contribution, Rollover and Subscription agreement. Under the terms of this agreement, the Company's executives were provided ownership interests in the Partnership in exchange for promissory notes.
These agreements are in substance, compensation arrangements and are accounted for as instruments similar to a stock option. Compensation expense is recognized at each balance sheet date with the changes in value recorded in the consolidated statements of operations with the corresponding recognition of the noncash contribution from the Partnership in additional paid in capital in the consolidated balance sheets.
The Company elected to account for these awards using the intrinsic valuation technique which represents excess value of the employees' Class A-2 units that were exchanged for promissory notes over the exercise price (which represents the face value of the promissory notes plus accrued interest). 15,600,000 of A-2 units were granted on September 21, 2018 and the intrinsic value of these awards on the grant date was equal to the value of the award. There were no additional grants or forfeitures of these awards during the year ended December 31, 2022.
All Class A-2 units were settled as a result of the HELOC Transaction based on the Transaction Date fair value. As a result, the Company recognized a gain of $1,080 for the year ended December 31, 2022 in stock-based compensation expense on the consolidated statements of operations. As of November 30, 2022, the amount of gain allocated to the Company by specific identification (unit holder) amounted to $253 and amount of expense allocated based on revenue amounted to $827.
In December 2023, Binford Aggregator LP issued a new tranche of A-2 units to be provided to certain executives. As of December 31, 2023 and 2024 there were approximately 476,190 A-2 units outstanding. The intrinsic value of this award on the grant date was equal to the value of the award. No stock-based compensation expense was recognized in the years ended December 31, 2024 and 2023 and there were no forfeitures or exercises of these award during the years ended December 31, 2024 and 2023.
12. Related Parties
The Company has related party transactions with the Parent and Guarantor, which for the years ended December 31, 2024, 2023 and 2022 consisted of a distribution to Guarantor related to the Parent's centralized cash management arrangement, general and administrative expenses and stock-based compensation allocated to the Company by the Parent (Note 3). The Company also has related party revenue with the Parent due to certain royalty and other contractual fees owed to the Company by the Parent. Related party transactions with Parent and Guarantor consisted of the following:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Parent | |||
| Revenue | $ 20,461 | $ 14,914 | $ 15,642 |
| Accounts receivable | 1,479 | 820 | 1,213 |
| General and administrative expenses | 11,931 | 10,739 | 10,191 |
| Stock-based compensation | 1,848 | 3,817 | 4,409 |
| Guarantor | |||
| Distributions to Guarantor | $ 73,049 | $ 68,651 | $ 69,644 |
The Company has several agreements in place with related parties through common ownership by the Partnership, in the ordinary course of business as follows:
- x Paycor, a HR and payroll solutions company, provided payroll support services to the Parent and related expenses were allocated to the Company for the years ended December 31, 2023, and 2022.
- x Assured Partners, a national partnership of financial services firms, provided insurance and employee benefits services to the Parent and related expenses were allocated to the Company for the years ended December 31, 2024, 2023 and 2022.
- x Thoughtworks, a software development and digital transformation company, provided software solutions to the Parent and related expenses were allocated to the Company for the years ended December 31, 2024, 2023 and 2022.
AB Assetco LLC and Subsidiaries
Notes to Consolidated Financial Statements (in thousands of dollars)
Years Ended December 31, 2024, 2023 and 2022
x Leadify, a digital marketing company, provided marketing lead generation services to the Company for the year ended December 31, 2023.
The Company also employs seventeen as of December 31, 2024, twenty-five individuals as of December 31, 2023 and twenty-seven individuals, as of December 31, 2022 who own and operate franchises of wholly owned subsidiary businesses.
The Company recorded revenue and the corresponding accounts receivable related to these arrangements for the years ended December 31, 2024, 2023 and 2022.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, the Class B Profit Interest Units outstanding as of December 31, 2022, were as follows:
For Time-Vesting Units, the balance was 17,539,639 units with a weighted average fair value of $0.30 and a weighted average remaining contractual term of 4.92 years.
For Performance-Vesting Units, the balance was 128,858,713 units with a weighted average fair value of $0.22 and a weighted average remaining contractual term of 4.92 years. Also, for Time-Vesting Units, the balance was 46,865,701 units with a weighted average fair value of $0.30 and a weighted average remaining contractual term of 4.92 years. Finally, for Performance-Vesting Units, the balance was 48,225,786 units with a weighted average fair value of $0.22 and a weighted average remaining contractual term of 4.92 years.
These figures represent the number of profit interest units that were outstanding at the end of 2022, broken down by vesting type. These units may be granted to employees, executives, or franchisees as part of a compensation or incentive plan. The fair value represents an estimate of the value of each unit, while the contractual term indicates how long it will take for the units to fully vest. A prospective franchisee should understand how these units are distributed and how they might affect the overall equity structure of the Benjamin Franklin Plumbing franchise system.