What is the basis for Focus Cfo's estimate of accrued compensation?

According to the 2025 Focus Cfo Franchise Disclosure Document, the company estimates accrued compensation based on average blended historic compensation percentages realized in the past twelve months. This estimate is applied to outstanding invoices in accounts receivable as of the reporting date. Accrued compensation and payroll balances include compensation on collected amounts during the past month, estimated accrued compensation on future collections of accounts receivable, and accrued payroll due to Focus Cfo's employees.

In simpler terms, Focus Cfo calculates what it owes to franchisees and licensees (who are considered independent contractors) for their services by looking at the average percentage they've been paid over the last year. This percentage is then applied to any unpaid invoices (accounts receivable) at the end of the reporting period to estimate the accrued compensation. This ensures that Focus Cfo's financial statements accurately reflect its liabilities, including what it owes to its franchisees and licensees.

For a prospective franchisee, this means that Focus Cfo has a system in place to estimate and account for compensation owed for services provided but not yet paid. This system relies on historical data to project future compensation expenses. It is important to note that franchisees and licensees are compensated as independent contractors and receive compensation payments on invoiced services they have provided to FocusCFO clients after these amounts are collected by the Company. The Company remits compensation payments to independent contractors within 15 days of the end of each month after payments are received from the clients.