What are the characteristics of Level 2 quoted prices for financial instruments, as defined by Bw Premier Collection?

According to Bw Premier Collection's 2025 Franchise Disclosure Document, Level 2 quoted prices for financial instruments are defined based on specific market conditions and valuation methods. These include quoted prices for similar instruments in active markets. Additionally, Level 2 encompasses quoted prices for identical or similar instruments in markets that are not active, indicating that the market for these instruments may be less liquid or have fewer transactions. The category also includes model-derived valuations where significant inputs and value drivers are observable in active markets, suggesting that while a direct market price may not be available, the valuation is based on factors that can be verified through active market data.

This classification is part of a broader fair value measurement hierarchy used by Bw Premier Collection for its assets and liabilities. The company uses standardized procedures to estimate fair value, prioritizing quoted market prices from independent third-party sources when available, which are then classified as Level 1. The use of Level 2 valuations indicates a step down from the most reliable, directly observable market prices, but still relies on observable market inputs to a significant extent.

For a prospective franchisee, understanding these classifications is important for assessing the financial health and risk management practices of Bw Premier Collection. While franchisees are not directly involved in these financial valuations, the stability and accuracy of the franchisor's financial reporting can impact the overall health and reputation of the brand. Franchisees may want to inquire about the specific types of financial instruments Bw Premier Collection holds and how these valuations are used in the company's financial planning and risk assessment.