sted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and market - corroborated inputs.

Level 3 - Unobservable inputs for the asset or liability. In these situations, the Company develops inputs using the best information available in the circumstances. These inputs require significant judgment and estimation from management.

Regional Rights:

Regional rights are recorded at cost. The value of the regional rights is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. When the carrying value is determined to be impaired, an impairment loss is recognized in income in the year. The regional rights write downs amounted to $0 for the years ended December 31, 2024, 2023 and 2022.

Revenue Recognition:

In accordance with FASB Topic 606, Revenue from Contracts with Customers, or ASC 606, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. To determine revenue recognition, the Company performs the following five steps:

• Identification of the contract, or contracts, with a customer
• Identification of the performance obligation(s) in the contract
• Determination of the transaction price
• Allocation of the transaction price to the performance obligation(s) in the contract
• Recognition of revenue when or as the Company satisfies the performance obligations

The Company primarily recognizes revenue from franchise and regional development fees, transaction fees, annual membership fees, software and training fees, convention income, and ancillary revenues.

Note 1 Summary of Significant Accounting Policies (Continued)

Generally, revenue is recognized for each performance obligation as follows:

Initial franchise and regional development rights fees are determined by geographic area and population in that area and are recorded as deferred franchise fee and regional development right fees and amortized as revenue over the life of the franchise agreement (generally five years for franchise rights and ten or fifteen years for regional development rights). Franchise fee renewals are charged 10% of the then current initial franchise fee (not to exceed 25% of the initial franchise fee originally paid by the franchisee) and amortized as revenue over the life of the renewed franchise agreement. Regional development right renewals are charged 25% or 50% of the initial franchise fee depending on the original terms of the agreement.

Source: Item 23 — RECEIPT (FDD pages 42–235)