According to Exit's FDD, what inputs are considered in Level 2 measurements?

According to Exit's 2025 Franchise Disclosure Document, Level 2 measurements consider inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, for the asset or liability. These inputs include quoted prices for similar assets or liabilities in active markets. Also included are quoted prices for identical assets or similar assets or liabilities in less active markets. Level 2 measurements also consider other inputs that can be derived principally from, or corroborated by, observable market data.

In simpler terms, Level 2 measurements use observable data to determine the fair value of assets and liabilities, but not direct prices for identical items in active markets (which would be Level 1). This might involve looking at comparable assets in similar markets or adjusting data based on what can be reliably observed in the market.

For a prospective Exit franchisee, understanding these levels is important because it affects how the company values its assets and liabilities, which can impact financial reporting and potentially the overall financial health of the franchise system. Franchisees should be aware of how Exit determines these values, as it could influence investment decisions and financial planning.